“Alexis, I don’t want my children forced to sell the family home to pay the droits de succession (inheritance tax). Is it too late to act?”
This worry drives many of the conversations we have at Balmont Conseil. The transfer of wealth is the final — and often the most complex — act of a lifetime’s work. Between estate succession (which is imposed at the moment of death) and lifetime transfers (which are organised while you are still alive) lies a whole world of tax optimisation and estate planning that few private individuals genuinely master.
As an AI-Augmented Wealth Planner, my role is to lift the veil on these mechanisms so that you can make informed estate arrangements, minimise the tax consequences and ensure a serene intergenerational transfer.
1. Understanding the fundamentals: wealth transfer vs estate succession
Although often used interchangeably, these two terms cover distinct realities within your forward-planning strategy:
- Wealth transfer: a proactive step. During your lifetime, you decide to transfer part of your assets (real estate, financial holdings or family businesses) through lifetime gifts (donations entre vifs) or tools such as an assurance-vie (French life-insurance savings wrapper).
- Estate succession: the legal process that opens on death. It encompasses the estate’s assets and liabilities (actif et passif successoral) and follows the rules of the Code Civil if nothing has been prepared.
Who are the heirs?
French law protects the forced heirs (héritiers réservataires, principally the children). The reserved portion (réserve héréditaire) is the minimum share that is theirs by right. The remainder, known as the disposable portion (quotité disponible), can be allocated according to your wishes through a will (holographic or notarial).
2. The tools for transferring wealth during your lifetime
Anticipating the succession through optimisation levers is the best way to reduce inheritance costs.
- The family gift and advances on inheritance: the family cash gift (don familial, art. 790 G of the CGI) allows you to transfer up to €31,865 every 15 years to each child or grandchild entirely free of tax. Advances on inheritance allow you to help a child finance a project (such as a property loan) while maintaining balance between the heirs when the estate is finally reconstituted (reconstitution de patrimoine).
- Split of ownership (démembrement): by separating usufruct from bare ownership (usufruit et nue-propriété), you transfer ownership without losing the use of the asset. In certain complex arrangements we often recommend indexing the usufruct to protect the usufructuary’s income against inflation.
- The property-holding company (Société Civile Immobilière, SCI): it allows you to avoid joint ownership of the estate (indivision successorale). Be mindful, however, of the urban pre-emption right (droit de préemption) when property held within the SCI is sold, as it can affect the estate’s liquidity.
Split of ownership (démembrement)
This is the “holy grail” of gift optimisation. By gifting the bare ownership (nue-propriété) of an asset while retaining the usufruct (usufruit — the right to live in the property or collect the rents), you reduce the taxable base for gift tax. On death, the ownership is reunited (remembrement): your children recover full ownership without any further tax.
The property-holding company (SCI)
The SCI makes it easier to distribute complex assets (such as an income-producing building). Transferring shares in the company is often simpler than transferring a building directly, while allowing optimal wealth management through the articles of association.
3. Assurance-vie: capital outside the estate
Assurance-vie (the French life-insurance savings wrapper) is a formidably effective estate-planning instrument, chiefly because it derogates from the civil-law rules of succession (art. L132-12 of the Code des assurances).
Why is this capital said to be “outside the estate”?
The capital paid to the beneficiary is not deemed to form part of the deceased’s estate. This means that:
- The sums are not subject to the legal requirements of the reserved portion (réserve héréditaire) — save for premiums that are manifestly excessive.
- The taxation of the transfer is favourable: for payments made before age 70, each beneficiary benefits from an allowance of €152,500 on the sums received.
The reinvestment clause and protecting the surviving spouse
Within an assurance-vie, a reinvestment clause (clause de remploi) can be used to reinvest funds arising from the sale of separate property, ensuring that the capital remains within the intended part of the estate. It is a major tool for protecting the surviving spouse, allowing you to leave them immediate liquidity without waiting for the timescales of the notary handling the succession.
4. The key stages in settling an estate
After a death, settlement follows a strict protocol. If disagreements arise over the management of jointly held assets, the heirs may convene a family council (conseil de famille).
- Amicable division vs judicial division: amicable division (partage amiable) is always preferred for its speed. Where a deadlock persists, judicial division (partage judiciaire) before the court becomes unavoidable, dramatically increasing both costs and delays.
- The succession option: the heir has a set period in which to choose. If they do not respond, the other heirs may serve a formal notice to elect (sommation d’opter). Be mindful of the limitation periods (délais de prescription) — 10 years to claim an inheritance.
- Nullity of the succession: a serious error in drafting a will, or a breach of the reserved portion, can render the act void (nullité successorale), calling the entire distribution of assets into question.
5. Focus for company directors: the Pacte Dutreil
For business owners, the Pacte Dutreil (family-business transfer relief) is a major opportunity. Subject to a share-retention commitment, it exempts 75% of the company’s value from transfer duties. An indispensable forward-planning strategy to secure the longevity of the business.
FAQ: your questions on succession and wealth transfer
Q1. What are the deadlines for settling an estate?
The estate-tax return (déclaration de succession) must be filed with the tax authorities within 6 months of the death (12 months if the death occurred outside France). Missing this deadline triggers late-payment interest.
Q2. Can you disinherit a child?
In France, no — because of the reserved portion (réserve héréditaire). It is, however, possible to allocate the disposable portion (quotité disponible) to a third party or to another child through a will.
Q3. What is the difference between heirs and legatees?
Heirs are designated by law (family). Legatees are designated by you in a will.
Q4. How can I protect my surviving spouse?
Beyond the marriage contract, a gift between spouses (donation entre époux, or gift to the last survivor) increases the spouse’s entitlements, often offering them the choice between the usufruct of the whole estate or a share in full ownership.
Q5. Who should I consult for a wealth-transfer strategy?
The notary is indispensable for notarial deeds. The wealth management adviser (Conseiller en Gestion de Patrimoine, CGP), for their part, is the strategist who designs the comprehensive wealth review and coordinates the tax optimisation levers.
Q6. What is the difference between an informal gift and a notarial gift?
An informal gift (don manuel) is a hand-to-hand transfer (cash, jewellery). A notarial gift is compulsory for real estate and makes it possible to carry out a donation-partage (gift-division), fixing values to avoid later adjustments at the time of the estate succession.
Q7. How can I help one child repay their property loan without disadvantaging their siblings?
We use the civil-law reporting mechanism (rapport civil): the gift is treated as an advance. When the estate is reconstituted (reconstitution de patrimoine) on death, the sum is notionally added back to ensure fairness between all designated heirs.
Q8. What is a formal notice to elect (sommation d’opter)?
It is a bailiff’s act compelling a silent heir to decide whether to accept or decline the inheritance. They then have two months to respond, failing which they are deemed to have accepted it outright.
Q9. Why is démembrement so powerful for tax purposes?
Because on the death of the usufructuary, the bare owner automatically becomes the full owner. There is no further transfer tax to pay. It is an immediate net gain.
Q10. Can a holographic will be challenged?
Yes, if there is a suspicion that the deceased’s mental faculties were impaired, or where there is a defect of form. This is one of the common grounds for nullity of the succession (nullité successorale).
Conclusion: anticipation, the key to your family’s peace of mind
Successful estate planning is not simply a matter of filling in forms. It is an act of protection that spares your family the conflict of joint ownership (indivision successorale) and a haemorrhage of tax. By combining a wealth review, strategic gifts and suitable financial investments, you turn what might feel inevitable into a lasting legacy.
At Balmont Conseil, we use innovation to model your division arrangements and your tax strategies. Do not leave your estate succession to chance.
Ready to secure your loved ones’ future?
Contact Alexis Sagnier for a personalised consultation on your wealth transfer