Tax implications - boat as a gift

[laurensalzy]

Hello
I'm hoping someone will know something about this.
My parents live in France on a cruiser, Mom is British and Dad is South African (I am British too and live in England, boat also registered in England)
Apparently, if something happens to my Mom, the French government will take ownership of the boat as my Dad is not European.

They want to put the boat in my name to protect my Dad, are there any tax implications involved here? kind of hard to find this information on the net.

I'm thinking they should find a lawyer to confirm? Does anyone here maybe know?
I appreciate your reading this email.

Best regards
Lauren

 

[rogerthebodger]

I cannot tell you about French law but My wife and I are both English and live in South Africa. Where we came to SA we were told a similar story and needed to have a will that made each other beneficiary if either die first. If we both die together Daughter gets the lot.

 

[BabyBlue]

Hello Lauren
I'm not an expert but inheritance tax may become an issue if your mother was to die within 7 years. If her total estate is worth more than £320,000 then anything above this is liable for tax at 40%. The value of the boat would be taken into consideration even though it was given to you. HMRC is trying to make sure that assets are not transferred prior to a persons death to avoid this duty. If in doubt talk to an accountant or solicitor particularly if the amounts are significant.

 

[PlanB]

You need to get specialist French inheritance tax advice, as their rules are different from Uk and can be applied in addition to uk IHT.

 

[laurensalzy]

Thank you all very much, legal advice will be sought!
Lauren

 

[Tranona]

You really do need specialist advice from a solicitor. There are no tax implications for you on the transfer, but as said there are potential inheritance tax implications. What these are will depend on where your parents are domiciled for tax purposes and where their other assets are located. Find a solicitor who specialises in dealing with people who have assets in both countries. Should not be difficult as there are many Brits in similar situations (living in France and owning property there as well as UK).

BTW, think you have been given only part of the story. Probably not anything to do with your father's nationality, but unlike in UK property does not always pass automatically to spouse on death, but has to be willed to them. If your mother dies intestate then others including you have a claim. You don't say whether they are married, which will also have a bearing on how best to structure their wills.

 

[GrahamM376]

I know nothing about French law and what happens on sale of personal assets but maybe nothing to stop you purchasing the boat as a derelict for a nominal amount.

 

[cliff]

I know nothing about French law and what happens on sale of personal assets but maybe nothing to stop you purchasing the boat as a derelict for a nominal amount.

"£1.00 plus other considerations" I believe is the terminology used on the Bill of Sale.

 

[footsoldier]

Laurensalzy

If your immediate concern is simply the French tax implications, then I think I can help you. French law allows each parent to gift to a child up to 100k euro in any 10 year period, free of any tax. (The French rate of tax on gifts normally is the same rate as for CGT, and, I believe, for inheritance tax). I am in a rush so cannot source any more detail for you now, but if you Google around the subject of French gift tax, you will find the detail. Dependant on the value of the boat this may well solve your problem.

If their estates fall under UK IHT, the value would still be included in their worldwide estate for UK IHT purposes, but would fall out of it if one or other survives 7 years after the date of the gift.

 

[Tranona]

"£1.00 plus other considerations" I believe is the terminology used on the Bill of Sale.

However for UK inheritance purposes it would be considered a gift with reservation unless the donor pays an economic rent. Falls out after 7 years otherwise.

 

[westernman]

You can muddy the waters by registering the boat in all your names so that each of you owns all 64/64 parts.

This is kind of equivalent to "En Tontine" in France which can be used when buying a house. The house belongs 100% to each of you. If one of you dies, then it is as if the other person never existed (from the ownership point of view). However, they have worked out ways of taxing you anyway - but at least the ownership question is 100% resolved.

 

[Rowana]

My parents live in France on a cruiser, Mom is British and Dad is South African (I am British too and live in England, boat also registered in England)
Apparently, if something happens to my Mom, the French government will take ownership of the boat as my Dad is not European.

I don't follow this bit. Surely, if the boat is registered in the UK, How can the French take ownership?

Is it registered on the SSR, or part one registered?

If you or your parents are members of the RYA, I'd get on to their legal people, as I can't see what it has to do with the French government.

 

[Tranona]

I don't follow this bit. Surely, if the boat is registered in the UK, How can the French take ownership?

It is irrelevant where the boat is registered for the purposes of tax. All registration shows is the country under which flag it sails, although some registries are also a register of title. It is beneficial ownership (which is not the same as title) that is important and the jurisdiction that the owner comes under.

Just as an example, I used to be the beneficial owner of a Greek registered boat where the title was with a Greek company. If I had died then my ownership would pass automatically to my wife under UK law - or to whoever I named as a beneficiary in my will.

If the OP's mother dies then what happens to her estate (including the boat) is determined by the jurisdiction she is under.

 

[charles_reed]

Hello
I'm hoping someone will know something about this.
My parents live in France on a cruiser, Mom is British and Dad is South African (I am British too and live in England, boat also registered in England)
Apparently, if something happens to my Mom, the French government will take ownership of the boat as my Dad is not European.

They want to put the boat in my name to protect my Dad, are there any tax implications involved here? kind of hard to find this information on the net.

I'm thinking they should find a lawyer to confirm? Does anyone here maybe know?
I appreciate your reading this email.

Best regards
Lauren

French law is based on the Code Napoleon. In the event of the death of a parent, that parent's belongings are automatically distributed, equally to all their children. This is automatic and overrides, in law, any bequests in a will.
On the death of anyone with property or belongings in France this law applies - their nationality is irrelevant.
The information you give is too sketchy to answer with any accuracy and you'll need to Google in French to get effective answers on French law.
The suggestion made gives no protection to your father's interests and merely obscures the situation.

I'd suggest, rather than posting on an English language yottie site, your parents look to finding an English-speaking avocat. Any answers you get here are likely to mislead.

 

[westernman]

French law is based on the Code Napoleon. In the event of the death of a parent, that parent's belongings are automatically distributed, equally to all their children. This is automatic and overrides, in law, any bequests in a will.
On the death of anyone with property or belongings in France this law applies - their nationality is irrelevant.
The information you give is too sketchy to answer with any accuracy and you'll need to Google in French to get effective answers on French law.
The suggestion made gives no protection to your father's interests and merely obscures the situation.

I'd suggest, rather than posting on an English language yottie site, your parents look to finding an English-speaking avocat. Any answers you get here are likely to mislead.

The "En Tontine" is a way to avoid the succession laws.
Registering your boat with all of you owning all 64/64 parts I think achieves the same.

But I am not a lawyer, but look it up. You might like to start here:-

http://www.french-property.com/guides/france/purchase-real-estate/legal/joint-ownership/en-tontine/