Sharing the Assets of an Estate Between Heirs in France

You have family in France, and you are among the lucky nominees to the estate. What do you need to know? We explain everything in this article. 

Sharing the assets of an estate between heirs in France imposes certain conditions. This entails costs, which will depend on the nature of the property in the estate. We are talking about costs that affect the division itself, not the inheritance tax the heirs must pay. The division of an estate is also sometimes a source of potential litigation. Explanations, depending on the situation.

Sharing of movable property: sharing at no cost

When the estate only includes movable property (cars, paintings, money, etc.), it is optional to draw up a document.

The division can be done in the form and according to the terms chosen by the heirs:

 – If the partition is done without writing, the heirs do not have to pay any notary fees or registration fees.

 – If the partition is in writing, notary and registration fees will be charged, as for estates involving real estate.

Real estate: notary and registration fees

If the estate includes real estate, even in part, a written deed is required.

Cost of notarial acts

The notary who draws up the partition receives various fees.

 – Deed fees: their amount depends on the amount of the estate. To calculate them, the debts included in the partition are not deducted. 

The notary takes a different percentage per value bracket and adds it all up. For example, he will take 5% on the first bracket, 2% on the second bracket, 1.5% on the third bracket, 1% on the last bracket. To the total of the payments of the act thus obtained, it is necessary to add expenses of VAT.

Emoluments of formalities:

 ◦ These are acts made necessary by regulation, for example, applications for civil status.

 ◦ These formalities are paid according to scales. Since the order of February 26, 2016, the emoluments of formalities are fixed (the concept of unit of value has been abandoned).

Disbursements:

 ◦ These are the costs of the administrative documents that the notary needs to draw up the deed of partition.

 ◦ Their cost varies depending on the administrative documents.

Costs related to the partition of an estate

The written deed that effects the partition must be communicated to the taxes. The taxes deduct 2.5% from the value of the estate:

 – However, debts and notary fees are deducted from this value.

 – In addition, the tax authorities deduct 0.1% of the real estate value as a real estate security contribution.

Distribution of the estate: legal costs

The division may give rise to disagreements between the heirs, which may eventually be the subject of legal proceedings. Thus, when an amicable division proves impossible (in practice, when the undivided co-owners cannot agree), the notary refers the matter to the judge of the judicial court (ex-tribunal de grande instance) of the place where the estate was opened.

 – If the situation is simple, the judge orders the partition.

 – if the estate is complex, particularly concerning the terms of allocation of the property, the judge issues a judgment in which he appoints a liquidating notary to proceed with the partition and liquidation operations.

At the same time, a judge is appointed within the court to supervise these operations and their progress. He may grant preferential allocation of one or more assets to the heir or heirs who request it.

Even if they are involved in legal proceedings, the undivided heirs may at any time choose to revert to amicable partition if they reach an agreement.

Good to know: in the case of a legal proceeding, it is necessary to pay additional sums for lawyers’ fees, etc.

Partition rights: the case of the licitation of partition

The auction of the goods of an estate is the sale by auction of these goods, whether they are movable or immovable. This is done when there is indivision. The property owned jointly by the heirs is then sold.

What is an auction of the property of an estate?

According to the law, the auction is possible:

 – if the property owned in undivided ownership cannot be divided easily and without loss;

 – or if, in a partition, there is property that no co-partitioner is willing or able to take.

Good to know: a judge can order the auction.

The price of the property auction is shared among the heirs, who are co-owners of the property sold.

Taxation and costs of the auction of property of an estate

General provisions

Article 750 of the General Tax Code provides that:

 – undivided shares and portions of real estate acquired by auction are subject to tax at the rate provided for sales of the same property;

 – if a third party acquires the property sold by auction outside the joint ownership, the auction is considered as a transfer for valuable consideration; each co-owner is taxable for the capital gain realized for his share in the joint ownership.

Special provisions

There is a special tax regime when the purchasers of the property sold by auction (the successful bidders) are original members of the undivided co-ownership, their spouses, their ascendants or descendants, or the universal beneficiaries of one or more of them.

In this case, the auction is not considered a transfer for valuable consideration. Therefore, the auction of movable or immovable property belonging to an estate is subject to a registration duty or a land registration tax at a rate of 2.5%.

In addition, with regard to the other costs of the partition auction:

 – there is no tax or transfer duty to be paid for valuable consideration;

 – the auction of the estate’s goods is not subject to VAT as it puts an end to an indivision;

 – the taxation is calculated on the value of the goods;

 – the value representing the purchaser’s share of the property is not subtracted; on the other hand, the taxation is applied to the net assets of the property;

 – the liabilities are deducted, which include the debts of the deceased to the heirs.