Finance is a confusing topic, even when you’ve lived in a place all your life. But when you move to a new country, with a new language, things become even more complicated. Being fully aware of your financial situation before you move will save you both money and stress. French Connections HCB’s Financial Advisor, Simon Verity, offers his three essential tips.
- Make sure your Will and succession plans are in order
Most people don’t realise that the Will that you made in your country of origin is only likely to be accepted in France if it includes an expression of your wishes stating that you want the law of that country to apply to your global/European assets. It can be as easy as adding that simple statement to your existing Will, but it is crucial.
If you don’t have a Will at all, French succession rules will automatically apply and this may not align with what you would have liked to have happened. Worse the French tax office, solicitors and Notaires will all get involved for their share!
A new French law applicable to inheritances settled from November seeks to protect ‘disinherited’ children who do not receive what they would have been entitled to under French law. In certain cases, they may seek compensation from any French-based property. The new rule is likely to be hotly debated over coming months as it appears to contravene an existing EU law.
Meanwhile, you should never confuse inheritance rules and inheritance taxes. If you decide to leave your money to somebody who is not family for example, without proper planning they will be subject to 60% inheritance tax no matter where your Will was drawn up making the French taxman your biggest beneficiary.
For young parents, if you die without specifying a guardian, your children will normally be made a ward of state and there could be a legal wrangle to determine who they go to even if family members volunteer to step in.
All this can be sorted out quickly and easily, so it’s first on my list, with inheritance and estate planning an essential part of the same conversation.
- Consider your investments
Tax-efficient products that you enjoyed in your country of origin will only be beneficial while you live there and will normally offer no such benefit when you move away. Put another way, the French will not recognise tax-efficient products from other countries in most cases.
That raises the question of whether it is better to leave the money where it is, even though it’s not tax efficient, or to look for advantageous options here in France where you can grow your investments free of tax and, in some circumstances, also help with your estate planning.
- Understand your tax situation before you move to France
The last thing you want is to discover when you arrive in France that there are steps you could have taken before leaving your country of origin that would have helped with your new tax situation.
French tax may work in a different way to that which you are accustomed too and planning ahead is the only way to make sure you don’t miss out on advantages that might no longer be available to you once you have established yourself here.
In any case having a good grasp of how you will be taxed on your arrival is common sense so that there are no surprises and you can be sure you are living within your budget etc.
If you are already living in France, don’t panic.
It’s never too late to ensure that financial affairs are in order and to write a will, have an inheritance plan and maximise on investments or understand where tax benefits might exist. The worst thing is to do nothing and hope for the best. In my experience after the initial move to France the thing that keeps many people awake at night is worry about finances, tax and forced succession and there is much that can be done in these areas to help with proper planning.
At French Connections HCB, I offer a free half-hour fact-finding consultation where I discuss your individual situation and together we work out a plan to go forward.
There’s no ‘one size fits all’, so that initial conversation is important and it costs nothing.
Remember, financial planning is often low on people’s list of priorities, but clients frequently tell me how relieved they are when it’s all sorted out and they can get on with living their life in France without that worry. That’s the best part of my job.
You can contact Simon at [email protected]
