HELPLINE: 
How an 82-year-old Brit used it for tax-efficient inheritance
The situation. Brian*, an 82-year-old British retiree living in France, is divorced, has children and holds an S1, exempting him from French social charges. His income consists of £5,500 UK rental income and an £8,400 UK pension.
He pays no income tax in France or the UK and his liquid assets include Livret A (€22,950), LDD (€12,500), LEP (€8,000) and an assurance vie opened after age 70 (€135,000).
His largest asset is a £500,000 UK SIPP, which becomes fully subject to 45% UK inheritance tax unless transferred out of the UK. His French home is valued at €300,000, and his share of a UK rental property is £200,000. Total estate: €1,275,450.
The issue. Brian plans to sell the UK property and needs a tax-efficient structure to receive £200,000 of proceeds. He also wants to reduce the French inheritance tax burden for his children, something a standard assurance vie cannot achieve effectively when opened after age 70.
Cross-border strategy. We recommended a Luxembourg contrat de capitalisation, which offers strong asset protection, multi-currency flexibility and tax-efficient growth. Its decisive advantage is that it can be démembré (split into usufruit and bare ownership).
At 82, French rules value usufruit at 20% and bare ownership at 80% (Article 669 CGI). Brian can retain usufruit (full use and control) while gifting bare ownership to his children now. With French allowances (€100,000 + €31,865 per child), much or all of this can be gift-tax-free and the assets exit his future taxable estate.
Takeaway. For French residents with UK assets, a contrat de capitalisation provides advantages for growth and inheritance-tax optimisation, making it a far superior choice to assurance vie when opened after age 70.