Will Bequest to French Citizen be Subject to French Inheritance Taxes?
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Question:
My wife and I have an estate worth just less than the current federal estate tax limit, so I do not worry about US estate taxes. We have no children and plan to have a family member as executor. Upon death, we plan to have our assets collected and sold, which include property, brokerage accounts, 401K and IRAs. After taxes, costs, etc., we have asked our executor to divide the estate between our favorite charities, US citizen friends, and family (nieces and nephews). We also have good friends in France (no relationship) and would like to leave $200,000 or so to their daughter. The funds could probably be transferred in cash; however, my question then is how the US government views this and what is needed here to effect the transfer? On the receiving end, I have been reading about French inheritance law and believe my executor can send these funds, but they have to be reported to their government by the beneficiary and a stiff tax paid of upwards of 60%. Am I interpreting this correctly?
Response:
As far as I can tell, the French inheritance laws and taxes only apply to property in France or to the estates of residents of France. It doesn’t look like there would be any taxes on what you leave a French citizen. If you were to move to France or if you owned real estate in France, the answer would be different. To be certain, you or your friends could consult with a notaire in France. Bonne chance!
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This answer doesn’t follow French succession law. France taxes the receiver of the gift, not the deceased. So your friend’s daughter could be subject to a heavy tax burden. Better to talk to a tax professional on French law.
MadeinFrance,
It looks like it depends on how long the recipient has lived in France. According to this French government site, if the recipient has resided in France for fewer than the six prior ten years, they will not have to pay an inheritance tax, but if they’ve resided there for more than six out of the prior ten years, they do have to pay the tax. https://www.impots.gouv.fr/international-particulier/taxable-assets
I agree, it’s best to consult with a tax professional on French law.
Harry