Inheritance – Wealth Management CERN D. GARIOUD – F. CAMPAGNE

18 mars 2010CERN : Présentation Prisme Conseils. 2 Plan Inheritances Questions Wealth management (estate development) Questions & answers

18 mars 2010CERN : Présentation Prisme Conseils. 3 Inheritance French inheritance International inheritance Identification of the Marriage Settlement Case studies : Divorce Cohabitation Our advices

18 mars 2010CERN : Présentation Prisme Conseils. 4 Example used English man married with a french woman, without prenuptial agreement. They live in France, in a house they purchased together. They have 2 children, both live in France. Wealth : House : 500 K Savings : 300 K

18 mars 2010CERN : Présentation Prisme Conseils. 5 French inheritance After death, 4 steps : Who are the heirs ? What is part of the estate in case of inheritance ? Tax return Share the inheritance

18 mars 2010CERN : Présentation Prisme Conseils. 6 Death – opening place of the inheritance Main residence of the deceased and his spouse, Not necessarily the place of death…(hospital, holidays…)

18 mars 2010CERN : Présentation Prisme Conseils. 7 French inheritance – Who are the heirs ? Is there a Will ? Devolution of property Rule : depends on country Privileged heirs or not (in case of will) Rank heirsFranceOther Spouse21 Children12 Others33

18 mars 2010CERN : Présentation Prisme Conseils. 8 Legal – Three key words Usufruct : Ability to live or rent Bare ownership : own the object, without the right to use it. Full ownership : both !

18 mars 2010CERN : Présentation Prisme Conseils. 9 French inheritance – what is part of the estate in this case? The assets : The real estates, The liquid assets, The investments (not investment policies insurance) The liabilities : The debts The anterior gifts

18 mars 2010CERN : Présentation Prisme Conseils. 10 French inheritance :what is part of the estate ? Our example : Real estate 500 K / 2 = 250 Savings 300 K / 2 = 150 Total : 400 K

18 mars 2010CERN : Présentation Prisme Conseils. 11 French inheritance : Share of heirs Remember example : one spouse, two children. Without willWith will Option 1Option 2BetweenAnd Spouse100 % USUFRUCT 25 % FO075 % Usuf % FO Each child 50 % Bare Ownership. 37,5% FO50 % FO37,5 % Bare Ownership

18 mars 2010CERN : Présentation Prisme Conseils. 12 French inheritance : Tax return Inheritance taxes depend on the part of each heir, 6 months to pay taxes after death’s month.

18 mars 2010CERN : Présentation Prisme Conseils. 13 French inheritance : the share of the estate take into account the wishes of each heir Possible compensations, rewards. Can take a long time, even few years depending on the agreement between heirs

18 mars 2010CERN : Présentation Prisme Conseils. 14 Inheritance French inheritance International inheritance Identification of the Marriage Settlement Case studies : Divorce Cohabitation Our advice

18 mars 2010CERN : Présentation Prisme Conseils. 15 International inheritance Situations linked to international inheritance Principles

18 mars 2010CERN : Présentation Prisme Conseils. 16 International inheritance : definition An inheritance is international when : There are estates in more than one country, OR Deceased and at least one heir do not live in the same country.

18 mars 2010CERN : Présentation Prisme Conseils. 17 International inheritance : principles The same as for France, 2 steps : Civil and fiscal (aspects) Legal topics : Who are the potential heirs ? What is part of the estate in case of inheritance? Fiscal topics : How much is the inheritance tax ?

18 mars 2010CERN : Présentation Prisme Conseils. 18 Inheritance French inheritance International inheritance Identification of the Marriage Settlement Case studies : Divorce Cohabitation Our advice

18 mars 2010CERN : Présentation Prisme Conseils. 19 Which marriage settlement Is there a prenuptial agreement ? Otherwise, one has to refer to « The Convention of La Haye » : Wedding location First location of the newly weds Example : France : Community of all wealth created since wedding inception UK : Existence of 2 distinct estates Switzerland : 2 distinct estates with an indemnity process in case of termination.

18 mars 2010CERN : Présentation Prisme Conseils. 20 International inheritance : tax Existence or not of a bilateral tax agreement between the 2 countries. Generally speaking : Real estate : in the country where it is located, Non real estate is taxed in the country of the deceased person Rates : Variable depending on the countries and the relationships with the heirs

18 mars 2010CERN : Présentation Prisme Conseils. 21 Inheritance French inheritance International inheritance Identification of the Marriage Settlement Case studies : Divorce Cohabitation Our advice

18 mars 2010CERN : Présentation Prisme Conseils. 22 Case of divorce The situation will depend upon the existence of prenuptial agreement and upon the marriage settlement What is the origin of the assets ?

18 mars 2010CERN : Présentation Prisme Conseils. 23 Case of cohabitation Civil partnership (or similar) It depends on the country, and the way they consider the partnership. Persons in cohabitation : Generally speaking : Not concerned by the inheritance, Max inheritance tax if there is a will !

18 mars 2010CERN : Présentation Prisme Conseils. 24 practical advices Organize your inheritance before you die (share, will…) For the will : write it alone, or with the help of a notary. Organize proxies before you have need it, Protect your spouse with an investment policy insurance or life insurance. And if you need advices…

18 mars 2010CERN : Présentation Prisme Conseils. 25 Our advice Wishfull thinking is not a legal right ! Think, And be proactive !

18 mars 2010CERN : Présentation Prisme Conseils. 26 Questions ?

18 mars 2010CERN : Présentation Prisme Conseils. 27 Plan Inheritances Questions Wealth management (estate development) Questions & answers

18 mars 2010CERN : Présentation Prisme Conseils. 28 Wealth management Estate planning Realistic objectives Possible keys Conclusion

18 mars 2010CERN : Présentation Prisme Conseils. 29 Estate planning Establish desired objectives Analyse the current situation Wealth management proposed Implementation

18 mars 2010CERN : Présentation Prisme Conseils. 30 Desired objectives / 1 Create additional revenues Now Later (post retirement) Dispose of savings : Graving safely, With additional risk Develop your wealth Optimize taxes (rent, wealth tax…)

18 mars 2010CERN : Présentation Prisme Conseils. 31 Desired objectives / 2 SCI : Spousal protection, Then children. Can have a tax advantage in international asset More binding The investment policy insurance Very advantageous, Especially before 70 years old Can protect a partner or the person of his choice

18 mars 2010CERN : Présentation Prisme Conseils. 32 Possible keys Conceivable keys ImmediaterevenuesFuturesrevenuesSavingsWealthLess taxesProtect thespouse Real estate : Acquisition of the main residence  Real estate : Investment in rental property  Investments : Insurance life products Financial assets  Beneficed tax exemption regime

18 mars 2010CERN : Présentation Prisme Conseils. 33 Conclusion Enjoy your life ! Each case is different, Better act than take the burden…

18 mars 2010CERN : Présentation Prisme Conseils. 34 Questions ? We remain available after the presentation, Thank you for your attention.