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the
effect of a change of matrimonial regime on a tontine clause
Introduction
The
interest of a change of matrimonial regime to adopt the French matrimonial
regime of universal community ('la communauté universelle'), with a
clause attributing all property owned under the regime to the surviving
spouse ('clause d'attribution intégrale au conjoint survivant'), is
evident when compared with a tontine clause. The two mechanisms operate in
the same manner, i.e. the property is passed to the surviving spouse, but
the change of matrimonial regime has the distinct advantage that the
surviving spouse will not be liable to pay any inheritance tax (which is
not the case with the tontine clause). It is possible to give
retrospective effect to such a change of matrimonial regime, meaning that
it can be applied to a purchase that has already been made.
Effect
on a tontine clause
If
the title deed for the property to which it is sought to apply the change
of matrimonial regime contained a tontine clause, what will the impact be
upon this clause? One reasonable interpretation would be that the change
of matrimonial regime should govern the devolution of the property and
thus supersede the tontine clause. However, this is not necessarily
sufficient to ensure that, when the time comes, the desired result will be
achieved.
Position
of the tax office
The
position of the tax office is likely to be that the tontine clause remains
in place and governs how the property should be inherited. The property
will therefore still pass to the surviving spouse but not under the change
of matrimonial regime. If the tax office's position is upheld, this means
that the inheritance tax advantage is lost as inheritance tax can be
levied under the tontine clause and, unless it applies to other
properties, the change of matrimonial regime is effectively worthless.
Ensuring
the efficiency of the change of matrimonial regime
In
view of the risk with regards to the position of the tax office, it is
advised for the husband and wife to renounce to the tontine clause in an
act drawn up with the notaire prior to undertaking the change of
matrimonial regime. In this way, the tontine clause will be removed and
the change of matrimonial regime can achieve its full effect. This is the
recommendation of the notaire's legal advisory body, CRIDON. Evidently,
this will increase the costs involved as the renunciation will lead to
additional fees but it is money well spent to ensure the efficiency of the
change of matrimonial regime.
11/05/2005
- Issue of the week
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