Two Instruments, Two Degrees of Control
Before the 2006 reform, successive transmissions of the same asset to two beneficiaries in turn were generally prohibited as substitutions fidéicommissaires. The reform introduced two instruments that permit controlled multi-generational transmission while maintaining a balance with the first beneficiary's rights. Both share a common architecture: the original donor makes a gift that passes in two stages, each stage vesting full ownership successively. They differ in the degree of constraint imposed on the first recipient.
Charge on first recipient: Must conserve the asset in specie AND transmit it at death to the designated second recipient (C. civ. Art. 1048).
First recipient's powers: Full owner but disposals are retrospectively annulled if they predecease the second recipient.
Securities portfolio: Arbitrage permitted; new securities subrogated to those sold (C. civ. Art. 1049, al. 2).
Typical use: Protecting a disabled or spendthrift child while ensuring the asset ultimately passes to siblings or their descendants.
Charge on first recipient: Must transmit whatever survives at their death to the designated second recipient. No obligation to conserve (C. civ. Art. 1057).
First recipient's powers: May sell, consume or donate the asset inter vivos. Cannot dispose of it by will or by donation au dernier vivant.
If asset is sold or lost: The second recipient has no claim to the proceeds or any substituted asset (C. civ. Art. 1058, al. 2).
Typical use: Providing a broad living standard to an elderly parent while directing remaining assets to the next generation.
The Libéralité Graduelle in Detail
Three essential conditions
A libéralité graduelle requires three elements (C. civ. Art. 1048 and 1055): (1) a double successive gift on the same assets in full ownership — first to the grevé, then to the appelé; (2) a double charge on the first recipient: to conserve the asset and to transmit it at death; and (3) the second transmission occurs at the first recipient's death — not at a fixed term or on a condition. If any element is absent, the instrument is not a graduelle. A charge to conserve without an obligation to transmit is a mere clause d'inaliénabilité. A gift where the second recipient takes if the first cannot or will not accept is a substitution vulgaire (C. civ. Art. 898), not a graduelle.
Eligible assets, limits, and publication
The instrument may cover assets of any kind provided they are individually identifiable at the date of transmission. A fractional share in the donor's general estate is not eligible. The graduelle is limited to one degree: the second recipient cannot themselves be subject to the same obligation to conserve and transmit (C. civ. Art. 1053). No family link is required between the parties. The second recipient may be a person not yet born, provided they are designated in the deed. For immovable property, the charge must be published at the service de la publicité foncière to be enforceable against third parties (C. civ. Art. 1049, al. 3).
The first recipient: full owner, constrained
Until their death, the first recipient is full owner of the gifted asset. They may administer it freely, receive its income, and in principle perform acts of disposal. However, any such disposal will be retrospectively annulled if the first recipient predeceases the second. If the second recipient dies first, the gift in the first recipient's favour is consolidated and all their disposals are definitively validated. The first recipient may voluntarily hand over enjoyment to the second recipient during their lifetime (C. civ. Art. 1050, al. 2), without prejudice to prior creditors or third parties who had already acquired rights.
Protection of the first recipient's reserved share
Where the first recipient is a reserved heir of the donor, the charge may only be imposed on the freely disposable portion — the reserved share must pass free of charges (C. civ. Art. 912 and 1054). The first recipient may consent to the charge extending to all or part of their reserve. For a legacy, the legatee has one year from learning of the will to request release of their reserve from the charge; after that, they are bound.
The second recipient: contingent rights
The second recipient holds only an eventual right during the first recipient's lifetime. They become owner at the first recipient's death, without retroactivity. Critically, they are deemed to hold their rights directly from the original donor, not from the first recipient (C. civ. Art. 1051). The transferred asset is therefore neither rapportable nor reducible in the first recipient's succession.
The Libéralité Résiduelle in Detail
The libéralité résiduelle imposes a single charge on the first recipient: to transmit whatever remains of the gifted asset at their death (C. civ. Art. 1057–1061). There is no obligation to conserve. The first recipient may freely sell, give away, or consume the asset during their lifetime. Only a testamentary disposition and a donation au dernier vivant are prohibited (C. civ. Art. 1059, al. 1). The consequence is radical: if the asset no longer exists at the first recipient's death, the second recipient has no claim at all. There is no subrogation on sale proceeds (C. civ. Art. 1058, al. 2; Cass. 1ère civ. 20-2-2008 n° 06-14.704). The same principle applies to reinvested proceeds, except for securities portfolios where arbitrage is permitted and new securities are subrogated to those sold.
The first recipient under a résiduelle owes no duty of account to the donor or their heirs (C. civ. Art. 1060). Like the graduelle, the second recipient is deemed to hold their rights directly from the original donor; the residuum is not part of the first recipient's estate for reserve or rapport purposes.
A parent who has three children, one of whom has no descendants and lives modestly, may use a libéralité résiduelle within a donation-partage: the childless child receives their lot with the residual charge that whatever remains at their death passes to the donor's grandchildren (the other children's families). The childless child can sell, spend, or donate any part of their lot during their lifetime — but cannot leave it by will to a non-family beneficiary.
Fiscal Regime (Common to Both Instruments)
| Stage | Who pays | Basis | Credit for prior tax |
|---|---|---|---|
| First stage (at donation or at donor's death for a legacy) | First recipient only | Full market value of the asset; tariff based on the donor–first recipient relationship | N/A |
| Second stage (at first recipient's death) | Second recipient | Market value at the first recipient's death; tariff based on the donor–second recipient relationship (they hold directly from the donor) | Duties paid at the first stage are imputed against those due at the second stage (CGI Art. 784 C, al. 2–3). Imputation is possible even where the donor paid the first-stage duties. |
The imputation mechanism avoids full double taxation but does not eliminate all tax cost at the second stage: where the asset has appreciated between the two stages, the second recipient is taxed on the higher value with only a credit for the earlier (lower) duties.
Where the instrument is a donation (inter vivos) and the donor survives the first recipient, the second recipient's transfer is treated as a donation for tax purposes — benefiting from the generally higher donation abatements (€100,000 between parent and child vs €31,865 between grandparent and grandchild). This distinction matters particularly in cross-generational structures: a grandparent donating to a grandchild pays the grandparent–grandchild abatement (€31,865) at the first stage, but if the donor is still alive at the second stage, the second recipient's tax may be assessed as a donation rather than a succession.
Alternative Techniques
Structure: The donor gives usufruct to one person and bare ownership to another simultaneously — not successively. Both receive their respective rights immediately (C. civ. Art. 899).
Tax advantage: The usufruitier and nu-propriétaire each pay duties on their respective portions at the first stage (CGI Art. 669). At the usufruitier's death, the bare owner's ownership consolidates with no further duty (CGI Art. 1133).
Key advantage over graduelle/résiduelle: No taxation on appreciation — the bare owner pays nothing when they become full owner. Simpler to implement.
Limit: Cannot be used for unborn beneficiaries (unlike the graduelle/résiduelle).
Structure: Two separate donations without a charge to transmit: donor → first recipient, who then independently donates to the second recipient. Each donation uses its own abatement.
Apparent tax advantage: Doubles the available abatements. Example: grandfather → father (€100k abatement) then father → son (€100k abatement) vs grandfather → son directly (€31,865 abatement).
Tax abuse risk: The Comité de l'abus de droit fiscal has confirmed that concomitant or closely timed cascade donations where the intermediate recipient serves merely as a conduit may be recharacterised as a direct donation (CADF/AC n° 1/2018 aff. 2017-31).
Risk mitigation: Adequate time between the two donations; genuine personal use of the asset by the first recipient; non-fiscal purpose for the two-step structure.
Donation à charge de redonner
A third technique involves a donor giving an asset to a first recipient on the express condition that they donate it, in whole or in part, to a designated third party. This is analysed as a stipulation pour autrui (C. civ. Art. 1205). Until the secondary donee accepts, the donor may revoke the stipulation. Gift duties are assessed at the time of the secondary donation and based on the relationship between the original donor and the secondary donee — not the relationship between the primary and secondary donee. A grandparent who routes a gift through their child to a grandchild secures only the grandparent–grandchild abatement (€31,865), not the parent–child abatement (€100,000).
For most cross-generational wealth transfer scenarios, the double libéralité d'usufruit et de nue-propriété is fiscally superior to both the graduelle and the résiduelle, because full ownership consolidates in the bare owner free of further duty, with no taxation on appreciation. The graduelle and résiduelle earn their place where the donor specifically wants two successive full owners — for example, to provide a dependent family member with full ownership rights (including the right to sell and reinvest), while still directing the residual wealth to the next generation.
Our guides cover the choice between libéralités graduelles, résiduelles, and alternative structures including donation-partage and usufruct arrangements under French succession law.
Book a ConsultationThis article is provided for general informational purposes only and does not constitute legal advice. The rules described apply to libéralités graduelles and résiduelles consented since 1 January 2007. Tax treatment depends on the specific facts of each situation and may be subject to challenge on abuse-of-law grounds. Readers should consult a qualified French lawyer and tax adviser before implementing any multi-generational transfer structure.
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Key Legal References
Libéralité graduelle: imposes a double charge on the first recipient (grevé): (1) to conserve the asset in specie; (2) to transmit it at death to the designated second recipient (appelé). Three essential conditions: double successive gift in full ownership; double charge (conserve + transmit); second transmission occurs at first recipient’s death. Limited to one degree — the second recipient cannot themselves be subject to the same obligation. No family link required. Eligible for unborn beneficiaries. Disposal by first recipient retrospectively annulled if they predecease the second; consolidated definitively if second recipient dies first. For immovables: charge must be published at the service de la publicité foncière. Securities: arbitrage permitted; new securities subrogated to those sold
Second recipient holds rights directly from the original donor — not from the first recipient. Transferred assets are neither rapportable nor reducible in the first recipient’s succession
One degree limit: second recipient cannot themselves be subject to the same obligation to conserve and transmit. If deed purports to extend charge to second degree, excess is void but first-degree charge remains
Reserve of first recipient: where the first recipient is a reserved heir of the donor, the charge may only be imposed on the freely disposable portion. First recipient may consent to the charge extending to all or part of their reserve. For a legacy: one year from learning of the will to request release of reserve from the charge
Libéralité résiduelle: single charge on first recipient — transmit whatever remains at death to designated second recipient; no obligation to conserve. First recipient may sell, consume or donate inter vivos; cannot dispose by will or donation au dernier vivant. If asset no longer exists at first recipient’s death: second recipient has no claim — no subrogation on sale proceeds; no claim on substituted assets. First recipient owes no account to donor or their heirs. Securities portfolio: arbitrage permitted. Second recipient holds from original donor
Imputation of first-stage gift duties against second-stage duties: duties paid at the first stage are imputed against those due by the second recipient at the second stage. Imputation possible even where the donor paid the first-stage duties. Where asset has appreciated between stages, second recipient taxed on higher value with only a credit for earlier (lower) duties
No succession duty on consolidation of bare ownership at usufruitier’s death (alternative technique: double libéralité d’usufruit et de nue-propriété): no taxation on appreciation; nu-propriétaire becomes full owner without further duty
Substitution vulgaire (valid — distinguished from graduelle): gift where the second recipient takes if the first cannot or will not accept. This is a valid substitution under Art. 898, not a libéralité graduelle
Donation en cascade tax abuse risk: concomitant or closely timed cascade donations where the intermediate recipient serves merely as a conduit may be recharacterised as a direct donation. Risk mitigation: adequate time between donations; genuine personal use of asset by first recipient; non-fiscal purpose for two-step structure
