Estate Planning in France: The Tools That Protect Your Family

Why plan your French estate

Estate planning in France is the work of arranging, in your lifetime, who receives your assets, when they receive them, and at what tax cost — so that the outcome reflects your wishes rather than the raw default of the law. French succession law does not leave your estate to chance: absent any planning, it applies forced heirship (réserve héréditaire), a fixed order of heirs, and a tax tariff that can reach 60% between unrelated people. Planning is the difference between an estate that lands where you intend and one that is carved up by rules you never chose.

The single feature that most surprises foreign owners of French property is that you cannot freely disinherit your children. Descendants are reserved heirs, and the reserve is not a headline you can ignore: with one child, one half of the estate is reserved; with two, two thirds; with three or more, three quarters, leaving only the balance — the freely disposable portion (quotité disponible) — that you may give away as you please (Article 913 of the Civil Code). What is not reserved is the part of the estate that is not set aside by law and of which you may dispose freely by gift or will (Article 912 of the Civil Code). Estate planning in France therefore works inside this frame: it does not abolish the reserve, but it uses a set of recognised tools to move value early, to protect a surviving spouse, to shelter a vulnerable heir, and to cut the tax the next generation will pay.

The surviving spouse is the second reason planning matters. Left to the default, a spouse who survives alongside the couple's own children takes only a choice between the life interest (usufruit) of the whole estate and one quarter of it outright (Article 757 of the Civil Code) — often less protection than a couple assumes, and much less than they can arrange in advance. And the third reason is tax. French gift and inheritance duty is charged by reference to the relationship between the giver and the recipient and rises steeply as that relationship becomes more distant, so the timing and the structure of a transfer, not just its destination, decide how much duty is paid. This article sets out the tools French law gives you to protect your family, how each one works, and how they fit together into a plan.

The core tools at a glance

French estate planning is not one instrument but a toolbox, and the right plan almost always combines several. Each tool answers a different question: how to move value early and cheaply, how to keep the income or the use of an asset while giving away its capital, how to steer a defined sum outside the ordinary rules of the estate, how to keep an asset managed after death, and how to protect an heir who cannot manage for themselves. The art of planning is matching the tool to the goal.

The workhorses are lifetime gifts (donations), which shift assets to the next generation now and reset the tax clock; the splitting of ownership into a life interest and bare ownership (démembrement de propriété), which lets you keep the use and income of an asset while its capital passes on at a discount; life assurance (assurance-vie), which routes a chosen sum to a chosen beneficiary under its own tax regime; the family gift-partition (donation-partage), which distributes and divides assets among descendants in a single deed and freezes their value; and two mandates — the posthumous mandate (mandat à effet posthume) and the future-protection mandate (mandat de protection future) — which put management in trusted hands after your death or after your own loss of capacity. On top of these sit the graduated and residual gifts (libéralités graduelles et résiduelles), which chain a transfer across two successive beneficiaries.

None of these tools escapes the reserve. A gift or a life-assurance payout that encroaches on a reserved heir's share can be pulled back into account, and the reserve is calculated on a reconstituted estate that adds past gifts back in. What the tools do is arrange, discount and protect within the space the law allows — and, used together and early, they can transform the tax bill and the security of the family that a wholly unplanned estate would produce. The selector below matches the main tools to the goal you most want to achieve.

Lifetime gifts: moving value early

A lifetime gift is the most direct planning tool: you transfer an asset to your chosen recipient now, during your life, rather than leaving it to pass on your death. Its power comes from the tax allowances that refresh over time. Between a parent and each child, French law allows an abatement of €100,000 on the taxable value of a gift or inheritance, applied to the share of each child (Article 779 of the General Tax Code). The same €100,000 allowance is available to each parent, so a couple can pass €200,000 to each child free of duty — €100,000 from each spouse (Article 779 of the General Tax Code).

What makes the allowance a planning tool rather than a one-off is that it renews. French tax law looks back only fifteen years: for gifts made and estates opened on or after 17 August 2012, the look-back period (rappel fiscal) is fixed at fifteen years (Article 784 of the General Tax Code). The rule works by taking account, for fifteen years from a gift, of the allowances and the tax bands already used on that gift when duty is later calculated on a further gift or on the estate; once a gift is more than fifteen years old and meets the conditions, it is disregarded, and the allowances and the lower tax bands apply again as though no earlier gift had been made (Article 784 of the General Tax Code). A parent who gives €100,000 to a child and lives another fifteen years can give a further €100,000 free of duty — and so on. Starting early, and repeating on a fifteen-year cycle, is the most reliable way to move a substantial estate to the next generation at little or no tax cost.

Gifts, the reserve, and reporting

A gift is not a way around forced heirship. On the giver's death, gifts are notionally added back to the estate to check that no reserved heir has been shortchanged, and a gift that eats into the reserve can be reduced. There is also a strict duty of disclosure: the parties to any deed recording a lifetime gift, and to any inheritance declaration, must state whether earlier gifts have been made by the giver or the deceased to the same recipient, whatever their date and in whatever form (Article 784 of the General Tax Code). The look-back is counted from the date the earlier gift acquired a certain date — for a notarised gift, its date; for a private deed, the date it was registered (Article 784 of the General Tax Code). Planning with gifts therefore rewards documentation and timing: a gift correctly dated and declared today is the gift that will drop out of the reckoning fifteen years from now.

Splitting ownership: the usufruct and bare-ownership technique

Splitting ownership (démembrement de propriété) is the tool that lets you give away the capital of an asset while keeping its use and income for life. Full ownership is divided into two rights: the life interest or usufruct (usufruit), which carries the right to use the asset and take its income, and the bare ownership (nue-propriété), which is ownership stripped of that use. A parent typically gives the bare ownership of a property to the children and keeps the usufruct, continuing to live in the home or collect the rent, while the children own the underlying capital.

The tax advantage is built into the way the two rights are valued. For gift and inheritance duty, the value of the usufruct and the bare ownership is fixed by an age scale set out in the General Tax Code (Article 669 of the General Tax Code). The younger the person keeping the usufruct, the more the usufruct is worth and the less the bare ownership is worth — so the taxable base of the gift, which is only the bare ownership, is smaller the earlier you act. On a gift with reserved usufruct, duty is charged only on the value of the bare ownership, calculated from the giver's age under the scale (Article 669 of the General Tax Code). To take one worked figure from the scale, where the person keeping the usufruct is aged 62, the usufruct is valued at 40% and the bare ownership at 60% of the full value, so a gift of the bare ownership of an asset worth, say, €500,000 is taxed on €300,000, not €500,000.

The decisive advantage comes on death. When the person who kept the usufruct dies, the usufruct is extinguished and the bare owner recovers full ownership of the asset — and that consolidation happens free of any transfer duty. The children paid duty once, years earlier, on a reduced base, and take full ownership on the survivor's death without paying again. A fixed-term usufruct is valued differently: an usufruct granted for a set period is worth 23% of the full value for each ten-year period, without splitting a part-period (Article 669 of the General Tax Code), so a usufruct for any period over ten years is valued at 46%, and this figure can never exceed the value the lifetime scale would give.

Assurance-vie: a chosen sum to a chosen beneficiary

Life assurance (assurance-vie) is the tool that lets you route a defined sum to a named beneficiary under a favourable tax regime largely separate from the ordinary rules of the estate. You take out a policy, pay premiums into it, and name a beneficiary; on your death the insurer pays the proceeds to that beneficiary. The tax treatment turns on one hinge: your age when each premium was paid (Article 757 B of the General Tax Code; Article 990 I of the General Tax Code).

Premiums paid before age 70. Sums attributable to premiums paid before your seventieth birthday fall under a special levy regime, with a generous allowance. Each named beneficiary receives an abatement of €152,500, applied per beneficiary across all policies combined; above that, the excess is taxed at 20%, and at 31.25% on the part of each beneficiary's taxable share above €700,000 (Article 990 I of the General Tax Code). Because the €152,500 allowance is granted to each beneficiary, a policyholder who names several beneficiaries multiplies the sheltered amount — a reach the ordinary inheritance allowances do not offer.

Premiums paid after age 70. Sums attributable to premiums paid after your seventieth birthday fall instead under inheritance duty, but with two important softeners. Only the premiums themselves are brought into the taxable base, and a single global allowance of €30,500 applies — one allowance whatever the number of beneficiaries and across all policies combined (Article 757 B of the General Tax Code). Crucially, the investment growth on the policy is excluded from the base: the gains attached to the contract, including those on premiums paid after 70, are entirely exempt from inheritance duty (Article 757 B of the General Tax Code). A policy funded after 70 therefore still shelters all of its accumulated returns; only the capital you put in, above €30,500, is taxed by reference to the relationship between you and the beneficiary.

Assurance-vie is powerful precisely because it lets you direct value to a spouse, an unmarried partner, a step-child or anyone else with allowances the ordinary tariff does not give — but it is not a device to defeat the reserve, and a policy funded with manifestly excessive premiums can be challenged and brought back into the estate. Used within its limits, it is one of the most efficient ways to protect a spouse or a chosen beneficiary in France.

The posthumous mandate (mandat à effet posthume)

The posthumous mandate (mandat à effet posthume) lets you appoint, during your lifetime, one or more managers who will administer all or part of your estate after your death, for the account and in the interest of one or more identified heirs (Article 812 of the Civil Code). It answers a precise problem: your heirs will inherit, but they may not, at the moment of your death, be able to manage what they inherit — because they are minors, because they are vulnerable, or because the estate contains a business that cannot be left to drift. The mandate keeps competent hands on the assets while the heirs' ownership is preserved.

Because the mandate holds the heirs out of the management of their own property, French law gives it binding force only where it is justified by a serious and legitimate interest, judged by reference to the person of the heir or to the estate, and precisely stated in the deed (Article 812-1-1 of the Civil Code). That interest — an heir who cannot manage, a business that needs continuity — must persist throughout the life of the mandate; if it disappears, the mandate can be revoked. Given the powers it confers, the mandate must be granted and accepted in authentic (notarised) form before the death, on pain of lapsing (Article 812-1-1 of the Civil Code). It is in principle gratuitous unless the deed provides otherwise, and any remuneration must be expressly fixed (Article 812-2 of the Civil Code).

How long it lasts, and how it ends

The mandate is deliberately time-limited. The default duration is two years, extendable one or more times by the court on the application of an heir or the manager; it may be fixed at five years, itself extendable, where the heir is unfit, on account of the heir's age, or because professional (business) assets must be managed (Article 812-1-1 of the Civil Code). It ends on the arrival of its term, on the manager's renunciation, on judicial revocation where the serious and legitimate interest is absent or has disappeared or the manager has performed badly, on a management agreement between the heirs and the manager, on the heirs' sale of the assets it covers, or on the death or protection of the manager (Article 812-4 of the Civil Code).

One limit is worth understanding before you rely on the mandate. The powers of administration it confers do not let the manager oppose the heirs' sale of the assets named in it; the Cour de cassation has confirmed that the heirs can bring the mandate to an end by selling those assets (Cass. civ. 12 May 2010, no. 09-10556). The posthumous mandate is therefore a strong tool for continuity and protection, but it governs management, not ownership — the heirs remain the owners, and a well-drafted plan pairs the mandate with the right ownership structure rather than relying on it alone.

The future-protection mandate (mandat de protection future)

The future-protection mandate (mandat de protection future) lets a person anticipate their own loss of autonomy by choosing, in advance, who will look after their interests when they can no longer do so themselves (Articles 477 to 494 of the Civil Code). Where the posthumous mandate takes effect on death, this mandate takes effect during life — it is the legal act by which a person makes arrangements for a period in which they will no longer be able to contract because of an impairment of their faculties (Articles 477 to 494 of the Civil Code). It sits in the estate-planning toolbox because incapacity, not only death, can leave a family exposed.

Its most valuable use for planning a family is protective in a very specific way: it lets parents designate, in advance, the person who will watch over the interests and manage the assets of a disabled child if the parents themselves are no longer able to do so because of their own future physical or mental impairment (Articles 477 to 494 of the Civil Code). A parent's deepest worry — what happens to a vulnerable child when I can no longer care for them — is exactly what this mandate is designed to answer.

The form of the mandate governs what the appointed manager may do. Where the mandate is made as a private signed deed, management is confined to acts of administration — the acts a guardian may perform without a judge's authorisation, such as renewing a tenant's lease. A notarised mandate goes further and can authorise the manager to carry out acts of disposition over the person's assets, for example selling a property or making a financial investment; even then, the manager may make a gratuitous disposition only with the authorisation of the protection judge (Articles 477 to 494 of the Civil Code). Choosing the notarised form is therefore what unlocks the power to sell and reinvest on behalf of the protected person — a distinction that matters greatly where the estate includes property that may need to be realised.

Graduated and residual gifts

Graduated and residual gifts (libéralités graduelles et résiduelles) let a single giver arrange a two-step transmission of an asset across two successive beneficiaries. Three people are placed in a chain: the giver, the first beneficiary (the burdened, le grevé), and the second beneficiary (the called, l'appelé), the last of whom is deemed to hold their rights directly from the giver rather than from the first beneficiary (Articles 1051 and 1061 of the Civil Code). The giver transfers an asset burdened with a charge; the difference between the two forms lies entirely in what that charge requires of the first beneficiary.

The graduated gift. A graduated gift (libéralité graduelle) burdens the first beneficiary with a double obligation: to keep the asset given, and to pass it on, in kind, to a pre-designated second beneficiary on the first beneficiary's death (Article 1048 of the Civil Code). The asset must be identifiable, and where it is real estate the charge is published at the land registry so that the burdened owner and third parties know its extent (Article 1049 of the Civil Code). During their life the first beneficiary is full owner and may in theory dispose of the asset, but any disposal is undone if the second beneficiary survives them — in practice the asset is locked into the chain. This is the tool for a giver whose priority is that a specific asset ultimately reaches a specific person — for instance a family property that must pass to a grandchild after benefiting a child, or an asset earmarked for a vulnerable child and then, on that child's death, for the person who will have cared for them.

The residual gift. A residual gift (libéralité résiduelle) is lighter. It provides that a second beneficiary will take whatever remains of the gift on the first beneficiary's death (Article 1057 of the Civil Code); it does not oblige the first beneficiary to keep the asset, but only to pass on what is left (Article 1058 of the Civil Code). The first beneficiary may therefore use, sell or even give away the asset during their life, and the second beneficiary takes only the surviving assets, and only if they outlive the first beneficiary (Article 1058 of the Civil Code). The choice between the two forms is a choice of priority: a graduated gift where preserving and re-transmitting the asset matters most; a residual gift where the first beneficiary needs the freedom to use and manage it.

Both forms enjoy a favourable and identical tax regime (Article 784 C of the General Tax Code). Duty is charged in two stages: the first beneficiary pays gift or inheritance duty on the asset in the ordinary way at the first transfer (Article 784 C of the General Tax Code), the second beneficiary pays nothing at that stage because they receive nothing yet, and on the first beneficiary's death the asset is taxed by reference to the second beneficiary's relationship with the original giver — not their relationship with the first beneficiary — with the duty already paid by the first beneficiary set off against the duty then due (Article 784 C of the General Tax Code). For a family that wants an asset to move down two generations while being taxed as if it came straight from the source, the graduated and residual gifts are precise and efficient instruments.

The donation-partage: distributing and freezing value

Alongside these sits the family gift-partition (donation-partage), the deed by which a giver both gives and divides assets among their descendants in one act. Its planning value is twofold. First, the assets it contains are not subject to the ordinary reporting-back (rapport) that unsettles a later division, so the partition is stable. Second, and decisively for tax and fairness, where a donation-partage is made to all the reserved heirs and reserves no usufruct over a sum of money, the assets are valued as at the date of the gift-partition rather than at the date of death (Article 1078 of the Civil Code). Freezing values at the date of the deed means later growth in the assets does not distort the equality between children or inflate the reserve calculation — a considerable advantage where property is expected to appreciate. The technique can even reach across generations as a trans-generational gift-partition, distributing among descendants of different degrees — grandchildren as well as children — with the intermediate generation's consent (Article 1078-4 of the Civil Code).

Building your plan

A French estate plan is built by matching tools to goals and then sequencing them. No single instrument does everything: the reserve limits how much you can steer, the tax tariff rewards early and repeated action, and protection of a vulnerable heir or a business needs management as well as ownership. The plan is the combination.

The usual starting point is to move value early with lifetime gifts, using the €100,000 per-child allowance and the fifteen-year renewal to shift capital at little or no duty (Articles 779 and 784 of the General Tax Code). Where you want to keep the use or income of an asset while giving away its capital, you layer démembrement over the gift, so that duty is charged only on the discounted bare ownership and full ownership consolidates tax-free on your death (Article 669 of the General Tax Code). A donation-partage can hold these gifts together, divide them fairly among the children, and freeze their values at the date of the deed (Article 1078 of the Civil Code). To protect a spouse or to reach a beneficiary the tariff would treat harshly, assurance-vie routes a chosen sum under its own allowances (Articles 990 I and 757 B of the General Tax Code). And where an heir is a minor or vulnerable, or where a business must keep trading, the posthumous mandate keeps competent management in place after death (Article 812 of the Civil Code), while a graduated gift secures the ultimate destination of a key asset (Article 1048 of the Civil Code) and a future-protection mandate guards against your own incapacity (Articles 477 to 494 of the Civil Code).

Sequence and documentation are where plans succeed or fail. Gifts must be correctly dated and declared to start the fifteen-year clock; démembrement gains from being done young; the mandates must be in authentic form and, for the posthumous mandate, accepted before death; and every step has to be checked against the reserve so that no reserved heir can later unwind it. For a cross-border family — a foreign owner of French property, or a French estate with heirs abroad — the interaction between these tools and the applicable succession law has to be settled before the deeds are signed, not argued over afterwards. The value of a plan lies in getting the order and the drafting right.

Frequently asked questions about estate planning in France

How do I plan my estate in France?

You plan a French estate by combining a small set of recognised tools around your goals. The usual building blocks are lifetime gifts using the €100,000 per-child allowance that renews every fifteen years (Articles 779 and 784 of the General Tax Code), the splitting of ownership into a life interest and bare ownership to pass on capital at a discount (Article 669 of the General Tax Code), assurance-vie to route a chosen sum to a chosen beneficiary (Article 990 I of the General Tax Code), a donation-partage to divide and freeze values (Article 1078 of the Civil Code), and mandates to keep assets managed after death or after loss of capacity. All of it must respect the children's reserved share.

What is a mandat à effet posthume?

A mandat à effet posthume (posthumous mandate) is a deed by which you appoint, in your lifetime, a manager to administer all or part of your estate after your death for the benefit of your heirs (Article 812 of the Civil Code). It has binding force only where justified by a serious and legitimate interest — an heir who cannot manage, or a business that needs continuity — precisely stated in the deed (Article 812-1-1 of the Civil Code). It must be granted and accepted in notarised form before the death, lasts two years by default (extendable), and can run to five years where the heir is unfit, on account of the heir's age, or to manage business assets (Article 812-1-1 of the Civil Code).

How can I protect a vulnerable heir?

Several tools combine to protect a vulnerable heir. A graduated gift can lock a specific asset onto the vulnerable child and then, on that child's death, pass it in kind to a chosen second beneficiary (Article 1048 of the Civil Code). A posthumous mandate keeps competent management of the inherited assets in place for the vulnerable heir after your death (Article 812 of the Civil Code). And a future-protection mandate lets you designate, in advance, who will manage a disabled child's interests and assets if you can no longer do so yourself (Articles 477 to 494 of the Civil Code). Assurance-vie can also direct a sheltered sum to the heir under its own allowances.

What is a graduated gift?

A graduated gift (libéralité graduelle) is a gift burdened with a double obligation on the first recipient: to keep the asset and to pass it on, in kind, to a pre-designated second beneficiary on the first recipient's death (Article 1048 of the Civil Code). It lets you decide the ultimate destination of an asset two beneficiaries down the line. Its lighter cousin, the residual gift (libéralité résiduelle), obliges the first recipient only to pass on whatever remains, leaving them free to use or sell the asset in the meantime (Articles 1057 and 1058 of the Civil Code). Both are taxed as though the second beneficiary received the asset directly from the original giver (Article 784 C of the General Tax Code).

How is assurance-vie taxed on a French death?

It depends on your age when each premium was paid. Sums from premiums paid before age 70 carry an allowance of €152,500 per beneficiary, with 20% duty above that and 31.25% on each beneficiary's share above €700,000 (Article 990 I of the General Tax Code). Sums from premiums paid after age 70 fall under inheritance duty with a single €30,500 allowance shared across all beneficiaries, but only the premiums are taxed — the investment growth is exempt (Article 757 B of the General Tax Code).

Can lifetime gifts reduce French inheritance tax?

Yes, provided you act early and repeat. Each parent can give each child €100,000 free of duty (Article 779 of the General Tax Code), and because French tax law looks back only fifteen years, the allowance and the lower tax bands renew in full once a gift is more than fifteen years old (Article 784 of the General Tax Code). Splitting ownership so that only the discounted bare ownership is given, with full ownership consolidating tax-free on your death, cuts the duty further (Article 669 of the General Tax Code).

What is a donation-partage?

A donation-partage is a deed that both gives and divides assets among your descendants in a single act. Its advantage is stability and value-freezing: where it is made to all the reserved heirs and reserves no usufruct over a sum of money, the assets are valued as at the date of the gift-partition rather than at death, so later growth does not distort equality between the children or inflate the reserve (Article 1078 of the Civil Code). It can also be made across generations to grandchildren with the intermediate generation's consent (Article 1078-4 of the Civil Code).

How our French lawyers help with estate planning in France

An estate plan is only as good as its drafting and its sequence. We advise owners and families on which tools fit their goals — lifetime gifts and the fifteen-year cycle, démembrement, assurance-vie, the donation-partage, graduated and residual gifts, and the posthumous and future-protection mandates — and we build them into a plan that respects the reserve, minimises duty, and protects a spouse or a vulnerable heir. For cross-border families, we settle how the plan interacts with the applicable succession law before the deeds are signed.

This article is for general information only. It does not constitute legal advice and does not create a lawyer-client relationship. How French estate-planning tools apply depends on the family, the assets, their location, and any will or choice of law. Contact our French lawyers for advice on your situation before acting.