The donation-partage (or gift with distribution) is a legal instrument under French law that allows individuals to distribute their assets among their children during their lifetime. It serves as both a lifetime gift and an anticipatory succession plan. This concept is especially relevant in France, where forced heirship rules apply, ensuring children (and in the absence of children, the spouse) receive a reserved portion of the estate.
In contrast to the UK, which lacks forced heir ship laws, the donation-partage is a strategic tool to prevent disputes and simplify the inheritance process. However, it is a complex legal arrangement that requires careful consideration and expert legal advice.
Key benefits of Donation-Partage
- Minimises family disputes: By agreeing to the distribution during the donor’s lifetime, children reduce the likelihood of disagreements after the donor’s death. The process helps avoid joint ownership complications and lengthy succession procedures.
- Tax advantages: Assets transferred via donation-partage are exempt from death duties. This can result in significant tax savings.
- Control over distribution: Donors have the flexibility to allocate assets as they see fit, provided the reserved shares of children are respected. For example, if a French estate is valued at €300,000 with two children, each child is entitled to at least €100,000, while the remaining €100,000 can be freely allocated.
- Valuation protection: The value of assets transferred through a donation-partage is fixed at the time of the gift. This contrasts with outright lifetime gifts, which are valued at the time of death, potentially creating unfairness in asset distribution.
Example of valuation discrepancy
Consider a scenario where a father gifts equal sums of cash to his two children. One child invests in property while the other spends their money. Upon the father’s death, the invested property may have appreciated, leading to a perceived inequality in inheritance. With a donation-partage, the valuation is frozen at the time of the gift, preventing such disparities.
Legal formalities
- Notarial deed: A donation-partage must be executed before a notaire (a public official specializing in French law).
- Spousal participation: If the couple’s matrimonial regime includes joint ownership, a joint deed is recommended to manage both individual and shared assets.
- Acceptance requirement: All beneficiaries must accept the donation-partage. If one refuses, the agreement remains valid for the others. The refusing beneficiary retains the right to challenge the donation if it undermines their reserved share.
Special considerations
- Reintegration of prior gifts: Outright gifts can be incorporated into a subsequent donation-partage, though they will be revalued at the time of reintegration.
- Conditional clauses: Donors may specify that in the event a beneficiary predeceases them, the gifted asset reverts to the donor. Proper drafting is essential to prevent complications, particularly with jointly held assets.
Why choose Tees
While the donation-partage offers substantial benefits, it is a technical legal tool requiring professional guidance. If you are considering using this mechanism to secure your family’s financial future, seek advice from a legal specialist experienced in French inheritance law.
Contact us today to explore how a donation-partage can work for you and your family.
