Estate planning

Estate planning consists of organising, during one's lifetime, the transfer of one's wealth in order to control its tax cost and secure its civil devolution. It combines civil-law tools (gifts, shared gifts, split of ownership (usufruct/bare ownership), quasi-usufruct, graduated gratuitous transfers) and tax tools (Dutreil agreements, wealth-holding companies, French fiducie (management trust), life insurance), coordinated with a notary and, where appropriate, a private bank.

The main allowances (French Tax Code art. 779) are: €100,000 in the direct line (per parent and per child, renewable every 15 years); €80,724 between spouses and civil (PACS) partners; €31,865 for grandchildren; €15,932 between siblings; €7,967 for nephews and nieces. In addition, a specific €31,865 allowance applies to family gifts of cash (art. 790 G French Tax Code), subject to age conditions for the donor and the donee.

The Dutreil agreement (French Tax Code art. 787 B and 787 C) allows the transfer of a business or of the shares of a company carrying on an operating activity with a 75% exemption on the value transferred for gift and inheritance tax purposes. It requires a collective holding undertaking (at least 2 years, covering at least 10% of the financial rights and 20% of the voting rights for listed companies, or at least 17% of the financial rights and 34% of the voting rights for unlisted companies), an individual undertaking by the donee or heir (4 years after the collective undertaking expires), and the exercise of a management function by a signatory or beneficiary for 3 years. The exemption can be combined with an additional 50% reduction where full ownership is gifted by a donor under 70 (French Tax Code art. 790 I). Estimate the saving with our simulator.

Quasi-usufruct (article 587 of the French Civil Code) applies to consumable assets, typically cash, securities accounts or matured life-insurance proceeds. The usufructuary may freely dispose of the asset, subject to an obligation to return to the bare owner, when the usufruct ends, assets of equivalent quantity or value. The quasi-usufruct agreement formalises this claim and makes it enforceable against the tax authorities, allowing the restitution debt to be deducted from the taxable estate (under the strict conditions of article 773-2° French Tax Code).

The exit tax (French Tax Code art. 167 bis) taxes unrealised gains on substantial shareholdings (at least 50%, or a value of at least €800,000) upon a transfer of tax domicile out of France. A payment deferral applies automatically for transfers to the EU/EEA (upon election for other destinations). The tax is discharged after a holding period (2 or 5 years depending on the case) if the shares are retained. The estate planning of a mobile business owner must factor in this mechanism; see our exit tax guide.

Luxembourg life insurance offers strong legal protection through the security triangle (segregation of assets, policyholder's super-priority), international portability (the applicable tax regime follows the policyholder's residence) and a wide range of investment vehicles (FAS, FID, FIC). French taxation continues to apply to a French-resident policyholder; see Circular CAA 26-1 (2026). A preferred tool for mobile clients and substantial estates.

Several levers exist: (i) a gift of bare ownership with retained usufruct (valuation under the art. 669 French Tax Code scale); (ii) holding through a family SCI, allowing shares to be transferred in successive tranches; (iii) a cross split of ownership between spouses; (iv) using a French fiducie (management trust) for complex estates or vulnerable beneficiaries; (v) coordination with real-estate taxation (VAT, transfer taxes) in any prior restructuring.

Under EU Regulation 650/2012, the law applicable to the succession is in principle that of the deceased's last habitual residence, with the option of choosing the law of one's nationality by professio juris. On the tax side, France taxes assets located on its territory, as well as the worldwide estate of French tax residents (French Tax Code art. 750 ter). Bilateral tax treaties on inheritance taxes prevent double taxation (the France-Switzerland treaty was terminated in 2014). See our study on international successions.