In the coming decades, the world is set to experience the largest intergenerational transfer of wealth in history. Dubbed the “Great Wealth Transfer”, this unprecedented phenomenon will see considerable assets pass into the hands of younger generations, redrawing the economic balance.
Worldwide, this trend is estimated to exceed $25,000 billion over the next 15 years. Against this backdrop, organizing the transfer of one’s estate is no longer a simple act of foresight, but a major economic, family and legal challenge.
Against this backdrop, the “great transfer of wealth” will undoubtedly have very significant fiscal and legal effects on a global scale.
To manage these effects effectively, it is essential toanticipate, structure and secure these transfers.
To achieve this, several legal instruments can be used, alone or in combination, to reduce the tax burden, ensure continuity of assets and safeguard the family’s future.
In France, the Fondation Jean Jaurès has estimated that this transfer could amount to almost 9,000 billion euros of inherited wealth over the next 20 years, largely due to the retirement of the so-called “baby-boomer” generations.
The current debates taking place in the French National Assembly (AN) as part of the Finance Bill for 2026 (PLF 2026) make no mistake. The President of the National Assembly herself has spoken of money “falling from the sky” in inheritances that need to be “reformed”, and numerous amendments have been tabled by the various political parties to adjust the tax regime applying to transfers.
As a reminder, in France, the scale of inheritance tax is as follows:
Direct line :
Net taxable portion after allowance Tax rate
Up to €8,072 5% of sales
8 072 à 12 109 € 10%
12 109 à 15 932 € 15%
15 932 à 552 324 € 20%
552 324 à 902 838 € 30%
902 838 à 1 805 677 € 40%
Over €1,805,677 45% of sales
Transmissions to collaterals (brothers, nephews) between 35% and 55%.
Transfers to third parties (friends, associations, trusts, etc.) 60%.
Please note: spouses and partners (PACS) are exempt from tax on the share to which they are entitled.
For other beneficiaries, only the portion accruing to them in excess of the applicable allowances is taxable at the rates mentioned, i.e. in excess of :
- 100,000 per child
- 31,865 € between grandparents and grandchildren
- 5,310 to great-grandchildren
- 15,932 for siblings
- 7,967 to nephews and nieces
- 1,594 for non-relatives or more distant relatives.
However, according to studies carried out to date, more than half of French people inherit less than 70,000 euros, and pay little or no tax on the transfer.
So, unlike income tax, social security contributions, VAT or corporate taxes, this tax actually affects a large minority.
With the development of the real estate market in particular, this low level of average inheritance is set to change rapidly in the years ahead. The CAE points out that inherited wealth is now accounting for around 60% of total wealth, compared with around 35% in the 1970s.
This transfer comes on top of a significant concentration of wealth: the richest 10% own more than half of the country’s assets.
From a legal and tax point of view, the increasing number of gifts, structuring operations and the international mobility of people and assets are making transfer schemes more complex.
Major tax issues :
- With such large sums to pass on, tax optimization is the order of the day (tax reductions, estate planning, anticipated donations, life insurance, inheritance agreements) and is becoming even more important. Donors and heirs will have to give serious thought to structuring their estate to improve the efficiency of the transfer.
- For family business transfers, the challenge is twofold: to ensure the continuity of the business, while at the same time dealing with the tax implications of the transfer. Tax relief or incentive schemes are often put in place (for example, the Pacte Dutreil). These measures are essential to the long-term survival of our economy.
- Encouraged by the state of public finances, the tax authorities have already stepped up and will undoubtedly continue to automate their controls, as well as modernizing their systems for monitoring international donations and inheritances.
- The stakes are also international: the mobility of people and assets makes transfers more complex for tax authorities to apprehend. For people with assets, interests or residences abroad, international tax and inheritance coordination is becoming a major issue.
Structuring legal issues :
- Legally speaking, the rules governing hereditary reserve, allowances and share of inheritance must be respected.
- The use of mechanisms such as life insurance, to pass on wealth outside the “traditional” estate, will continue to be prevalent.
- Inherited wealth is no longer limited to movable or immovable property, but is increasingly varied (businesses, portfolios, intangible assets). As a result, valuation, taxation and transfer are becoming increasingly complex.
- Business successions, for example, raise questions of governance, continuity, asset valuation and sharing between heirs. This can give rise to legal tensions within families (inheritance disputes, conflicts between heirs), and increased attention from public authorities to the protection of “more modest” heirs.
Crucial financial stakes for the State and public authorities:
- The massive influx of assets into transfers opens up a particularly attractive tax revenue opportunity.
- This voluminous transmission also entails a risk of circumvention or optimization by taxpayers.
- Public authorities may be urged to reform: simplify systems, increase progressiveness, reduce tax niches linked to gifts/transfers.
- The various reflections and attempts at reform are a clear demonstration of these three points.
Attempts at reform underway :
- The Senate’s Proposition de loi n° 710 (2018-2019) “aimed at adapting inheritance and gift taxation to the demographic, societal and economic challenges of the XXIᵉ century” and the various Commissions tasked with reflecting on a far-reaching reform of inheritance taxation in France have come to nothing.
- The Pacte Dutreil is under constant attack: at least 25 amendments aimed at reforming it have been tabled since the beginning of the debates on the PLF 2026, some of which have been adopted at this stage.
- To date, the PLF contains various reform proposals, including :
-
- The creation of a €31,865 allowance for children and grandchildren of spouses
- Double the allowance for brothers/sisters, uncles/aunts, nephews/nieces
- Raising the marginal bracket to 47% above €3.6 M
- Various changes to the Pacte Dutreil regime.
Food for thought for your transmissions:
- Carry out a wealth audit to determine which assets will be transferred (real estate, securities, business), to whom and at what cost.
- Anticipate the tax implications of different scenarios: free gift, inheritance, sale to heirs, etc.
- Take into account the international dimension (tax residence, foreign assets, impact of international treaties, multi-residents, etc.).
- Don’t neglect the legal aspects: drafting covenants, respecting hereditary reserves, choice of matrimonial property regime, etc.
- Think about trans-generational donations and wealth structuring operations to preserve assets and prepare beneficiaries for the assets held.
- Prepare for the transfer and future governance of businesses and professional assets.
- If you’d like us to help you think about these issues, please don’t hesitate to contact us via the “contact” section of our website.
