Unmarried Couples: How to Protect Your Partner Without a Survivor's Pension
Unmarried couples who are not in a civil partnership are not entitled to a survivor’s pension. However, there are several estate planning tools that can provide financial security for your partner, provided you set them up in time.
Beyond its emotional significance, marriage confers property rights that cohabitation and civil partnerships do not. Among these is the survivor’s pension, which allows the surviving spouse to receive a portion of the deceased’s pension—typically between 50 and 60 percent, depending on the plan. Yet unmarried couples account for nearly a quarter of all couples in France, and this benefit remains unavailable to them. Nevertheless, there are several ways to protect one’s partner, provided one understands how they work and their limitations.
Life Insurance: The First Line of Defense for Estate Planning
Life insurance remains the most effective tool for estate planning. For premiums paid before the policyholder turns 70, each beneficiary is entitled to a tax exemption of 152,500 euros. Above that amount, the taxable portion is subject to a 20% tax up to 700,000 euros, and 31.25% thereafter, regardless of the relationship to the policyholder. Most importantly, the policyholder is free to designate any beneficiary of their choice, without any requirement for marriage or a civil partnership (PACS).
This is a decisive advantage for a domestic partner. In the absence of a legally recognized relationship, the domestic partner would, under traditional inheritance law, be treated as a third party and taxed at a rate of 60 percent. Life insurance makes it possible to circumvent this system by transferring a lump-sum payment outside the estate, within the limits set by law. A carefully drafted beneficiary clause, specifically naming the partner, safeguards the policyholder’s intent and prevents disputes.
Real Estate, SCI, and Tontine Clauses
Real estate offers an alternative path. A couple can purchase a rental property to diversify their income, but the legal structure of the purchase requires special attention. Be cautious about purchasing as joint tenants; you’ll need to include a Tontine clause. This clause deems the surviving spouse the sole owner of the property from the outset, shielding them from the heirs. The downside is significant: the inherited share is subject to a 60% estate tax.
A real estate investment company (SCI) is another option. The partners must choose between income tax and corporate tax. Corporate tax allows for depreciation of the property—a significant advantage during the holding period—but can prove costly at the time of resale, as the capital gain is then calculated based on the net depreciated value. This choice should be considered in light of the holding period and the succession strategy, as an SCI also allows for the gradual gifting of shares.
The Will: The Key Element
None of these options eliminates the need for a will. Drawn up before a notary, a will allows you to bequeath to your partner the disposable portion of your estate—that is, the portion you may freely dispose of once the rights of the heirs entitled to a reserved share have been respected. It is important to note the following distinction: a civil union (PACS) partner designated in a will is entitled to the same inheritance tax exemption as a spouse, whereas a partner in a common-law relationship remains subject to a 60% tax rate.
A PACS (civil partnership) therefore does not provide for a survivor’s benefit, but it does protect the transfer of assets, provided that a will is expressly in place.
To minimize the tax burden on the partner, advance planning is essential. A bequest combined with a well-structured life insurance policy, or a gift made during one’s lifetime, allows for the distribution of the estate and helps spread out the tax burden, even though gifts between non-relatives are also subject to the 60% tax rate.
Unmarried couples are not without options: they have a wide range of tools at their disposal, provided they take action before death freezes a situation that the law—in the absence of marriage—will not automatically rectify. In practice, these solutions can be combined: life insurance to transfer funds outside the estate, a real estate investment company (SCI) or a tontine clause for shared property, and a will for the remainder. It’s a good idea to review this overall plan after every significant change in the couple’s life, as events such as buying a home or having a child can alter the desired balance.
