Gifting part of your estate to your children is an excellent method for reducing the value of your estate for inheritance tax purposes. Yet the conflict of English and French laws and taxes can result in highly disadvantageous situations.
The UK rules relating to taxation of gifts has been tightened substantially over the past few years and even if a French property is gifted these rules can apply. It follows that a common form of property gifting – by transferring the reversionary interest (nue-propriété) and retaining a life interest (usufruit) may result in a potential double imposition of tax.
This may not always be the case, but careful consideration must be given to ensure that the correct arrangements are made.
Another point to consider is that gifts are strictly limited in France, as they should not affect the strict rights of inheritance that children and certain other people may have.