Successive gift

What is a successive gift?

A successive gift is a type of donation “subject to an obligation requiring the donee to preserve the property or rights forming its object and to transfer them, upon their death, to a second beneficiary designated in the deed” (Article 1048 of the Civil Code).

A successive gift has several distinctive features:

• It imposes on the person receiving the property, called the first beneficiary (or burdened donee), a dual obligation, to preserve the property and to pass it on to a third party upon their death.
• It involves a third person, called the second beneficiary, who is intended to receive the property upon the death of the first beneficiary (Article 1048 of the Civil Code)

What are the necessary conditions for carrying out a successive gift?

A successive gift may only apply under the following conditions:

It can concern only property or rights that are identifiable on the date of the gift (in practice, the donor cannot transfer property that they do not yet own) and that still exist in their original form at the time of the first beneficiary’s death (as opposed to consumable goods, such as foodstuffs) (Article 1049 of the Civil Code).

The first beneficiary (the burdened donee) must agree to receive the property, preserve it, and transfer it upon their death to the second beneficiary (Article 894 of the Civil Code).

The second beneficiary may accept the gift either at the time it is granted by the donor in favor of the first beneficiary, or upon the latter’s death, when the property is actually transferred to them (Article 1050 of the Civil Code).

The successive gift may be accompanied by guarantees or securities to ensure the proper fulfilment of the obligation (Article 1052 of the Civil Code), such as a mortgage on the gifted property or on one of the first beneficiary’s assets to secure performance of their obligation.

The obligation cannot extend to a third beneficiary: it is not possible to stipulate that the second beneficiary must, in turn, preserve the property and transfer it to a third person (Article 1053 of the Civil Code).

Can the first beneficiary sell the property without the consent of the second beneficiary?

If the transferred property is real estate (land, apartment, etc.):
The obligation (that is, the duty to preserve and transfer the gifted property or right) must be registered with the Land Registry (Service de la publicité foncière) (Article 1049, paragraph 3 of the Civil Code and Article 30, 1°, of the Decree of 4 January 1955).
This means that any notary will have access to the information and may therefore oppose the sale.

If the transferred property is a movable asset (money, painting, etc.):
Since no registration in the land registry is required and there is no obligation to carry out the sale before a notary, the first beneficiary (the burdened donee) could act fraudulently by selling the gifted property.
In such a case, they would incur contractual civil liability for breaching their obligations.

What happens in the event of the death of the first or second beneficiary?

Death of the first beneficiary (the burdened donee) before the second beneficiary:
The successive gift provides that the second beneficiary becomes the owner of the gifted property on the date of the first beneficiary’s death (Article 1050 of the Civil Code).

Death of the second beneficiary before the first beneficiary:
Either the successive gift stipulates the designation of another second beneficiary or provides that the property will be transferred to the heirs of the second beneficiary; otherwise, the property will become part of the first beneficiary’s estate (Article 1056 of the Civil Code).

The same applies if the second beneficiary renounces the benefit of the gift.

What is the tax treatment of a successive gift?

Transfer duties free of charge (or gift duties) are subject to a specific tax regime:

The first beneficiary (the burdened donee) is taxed according to their relationship with the donor on the value of the property at the time of the gift.

The second beneficiary is also taxed according to their relationship with the donor (Article 1051 of the Civil Code) on the value of the property at the time of the first beneficiary’s death.

The duties paid by the first beneficiary are deducted from those owed by the second beneficiary (Article 784 of the French General Tax Code).

Good to note: It is also possible to provide for a successive legacy in a will. However, since the legatee always has the right to refuse the inheritance upon the testator’s death, it is advisable to designate a second legatee as a precaution.