Estate Planning for Americans Retiring in France

DOES FRANCE TAX AMERICAN RETIREMENT INCOME?

─────────────────────────────────────────────────

Largely, no, under the right conditions. The US-France tax treaty treats pensions very broadly, private pensions, IRA distributions, 401(k) and 403(b) withdrawals, Social Security, and US rental income all fall under the treaty's pension provisions. France taxes this income and then issues a full tax credit that zeros it out, leaving only US federal tax owed, and in most cases no US state tax either. It isn't quite accurate to call it ""tax-free,"" since France does technically tax it first, but the net result for the taxpayer is the same: zero French tax, US federal tax only, currently topping out at a 37 percent bracket. This is a genuinely unusual treaty provision; not every US tax treaty is this generous.

─────────────────────────────────────────────────

IS A ROTH IRA TAXED IN FRANCE?

─────────────────────────────────────────────────

No, and this surprises a lot of Americans, because so few countries recognize Roth accounts the way the US does. France is one of the exceptions. Roth distributions fall under the same treaty pension provisions described above, so a retiree with a substantial Roth balance can generally draw it down with no French tax and no US tax either, since qualified Roth withdrawals are already tax-free federally. Separately, investment income like dividends, interest, and capital gains on US-source investments can also be treaty-protected, though that provision specifically requires US citizenship, unlike the pension provisions.

Want more practical guidance on planning a cross-border move like this? Subscribe to the Passport To Wealth® newsletter.

─────────────────────────────────────────────────

WHAT HAPPENS TO YOUR ESTATE IF YOU DIE IN FRANCE?

─────────────────────────────────────────────────

France does not have a legal concept of an ""estate"" at all, that's a common law idea that doesn't translate. Instead, French law follows a principle called ""le mort saisit le vif,"" meaning heirs are entitled to a deceased person's assets immediately, on the date of death, with no settlement period in between. There is no pooled estate that gets taxed as its own entity. Instead, tax is assessed individually on each recipient's specific share. In practice, this creates real timing mismatches for American families: a US estate can still be in active administration years after death, while under French law the relevant date was always the date of death itself, and inheritance obligations may already be considered overdue by the time anyone looks at the French side of the picture.

─────────────────────────────────────────────────

DO YOU PAY FRENCH TAX ON AN INHERITANCE FROM A US PARENT?

─────────────────────────────────────────────────

Generally, no, thanks to the US-France estate and gift tax treaty, one of the more detailed treaties of its kind. If the person giving the gift or leaving the inheritance is based in the US, and the assets aren't real estate located outside the US, France will typically grant a full tax credit that zeroes out its own tax. On top of that, France has a separate six-year rule: for the first six years of French tax residency, gifts and inheritances received from outside France, again excluding French assets, are largely tax-free regardless of the relationship between giver and recipient. The one thing that doesn't go away, under either the treaty or the six-year rule, is the filing obligation. The threshold to file a gift or inheritance tax return in France is one euro, and the filing window is 30 days. Not filing doesn't necessarily mean no tax is owed later either: French tax authorities can treat an undisclosed gift as having occurred on the date it's discovered, sometimes as much as fifteen years after the fact, which can create a very different tax outcome than the one that would have applied at the time.

─────────────────────────────────────────────────

IS A US TRUST TAXED IN FRANCE?

─────────────────────────────────────────────────

It depends almost entirely on whether the trust makes distributions. France treats any US trust, revocable or not, as an opaque structure for tax purposes. If a trust holds a brokerage account that simply reinvests its dividends and interest and never pays anything out, the reporting obligation is usually just an annual filing, with no income tax due. The moment that trust distributes money, for example to cover monthly living expenses, that distribution becomes taxable in France, and typically at a flat 31.4 percent, because it is usually impossible to demonstrate what portion of the distribution was growth versus original principal, and the US tax treaty does not offer relief here. There's a second, separate issue at death: if the trust's settlor dies as a French resident, French authorities examine the trust's actual wording. A trust that clearly assigns specific percentages to named beneficiaries is generally treated like an ordinary French inheritance, taxed at normal progressive rates between roughly 0 and 45 percent depending on the relationship. Vaguer wording, for example language that leaves the exact split between beneficiaries undefined, can instead trigger a flat inheritance tax rate of 45 to 60 percent. For this reason, a cross-border tax attorney will often review, and sometimes recommend amending, a US trust's wording well before a client relocates.

─────────────────────────────────────────────────

SHOULD YOU MOVE YOUR US ESTATE PLAN TO FRANCE AS-IS?

─────────────────────────────────────────────────

For most families, no, not without a review first. The advice from this episode is straightforward: get the review done as early as possible, ideally a year before the move, so there's time to restructure or terminate any trust that doesn't fit French law, and to remove from a trust any assets that will actually be needed for day-to-day living expenses, since those are the assets most likely to trigger a taxable distribution. None of this means the US-France tax treaty stops being a good deal, for the right family, it remains one of the more favorable treaties in the world for retirement income. It does mean an estate plan built entirely around US law needs a second look before it's asked to survive contact with a completely different legal system.

─────────────────────────────────────────────────

CHAPTER TIMESTAMPS

─────────────────────────────────────────────────

00:00 - Why Americans are moving to France right now

02:35 - Inside the US-France tax treaty: pensions, IRAs, and Roth accounts taxed at zero

07:31 - Why dying in France is never a good idea, tax-wise

10:22 - Inheriting from a US parent while living in France, and the six-year tax holiday

13:47 - The one-euro filing rule most Americans don't know about

17:56 - Why French tax authorities almost always come after a US trust

─────────────────────────────────────────────────

ABOUT THE GUEST

─────────────────────────────────────────────────

Vincent Berthier de Bortoli is a French tax attorney and STEP member based in the French Alps. He has practiced tax for nearly a decade, founded his own French tax practice in October 2023, and now advises a clientele that is roughly 90 percent American families relocating to France.

─────────────────────────────────────────────────

ABOUT YOUR HOST

─────────────────────────────────────────────────

Arielle Tucker, CFP® & IRS Enrolled Agent with Connected Financial Planning, is a cross-border financial planner based in Switzerland helping Americans living abroad navigate U.S. taxes, international investments, and cross-border financial planning.

─────────────────────────────────────────────────

ABOUT PASSPORT TO WEALTH®

─────────────────────────────────────────────────

Passport To Wealth® is the platform for current and aspiring US expats looking for trusted, fiduciary support. We connect globally mobile Americans with expert, licensed cross-border financial advisors, tax professionals, and relocation experts who understand the financial and legal complexities of life abroad. For guidance tailored to your specific situation, book a paid expat expert consultation today.

─────────────────────────────────────────────────

STAY CONNECTED

─────────────────────────────────────────────────

• Pre-Order The Expat Money Playbook: https://www.passporttowealth.com/expat-money-playbook
• Instagram: https://www.instagram.com/passporttowealthofficial/
• LinkedIn: https://www.linkedin.com/company/passport-to-wealth/

─────────────────────────────────────────────────

_{This episode is for educational purposes only and does not constitute tax, legal, or financial advice. Individual circumstances vary. Consult a qualified cross-border financial professional before making any financial or tax decisions.}