Why do estate taxes matter for high-net-worth families?

The short answer

Estate taxes are taxes levied on the transfer of property at death. The structure varies dramatically: the US uses high exemptions with a flat marginal rate above (40%), while France uses a low abatement with a progressive schedule.

The 2026 inflection point is the US OBBBA, which makes the $15 million per-person federal exemption permanent starting January 1, 2026 — eliminating the prior TCJA sunset that would have reverted exemption to ~$7 million.

For France, the structural pressure is the opposite: the 100,000€ direct-line abatement frozen since 2011 means cumulative inflation (over 25% since 2011) has eroded its real value by a similar share, progressively dragging middle-upper-class estates into the higher brackets.

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What the data shows

Sources: IRS, French DGFiP, OECD Tax Database (2024-2026):

• US federal estate exemption from 1/1/2026: $15 million per individual / $30 million per couple (OBBBA)
• US federal estate tax rate above exemption: 40% flat
• US generation-skipping transfer (GST) exemption: aligned at $15 million from 1/1/2026
• France direct-line abatement: 100,000€ per parent per child, frozen since 2011
• France progressive schedule direct line: 5% up to 8,072€, then 10%, 15%, 20%, 30%, 40%, 45% above 1.8 million€ (after abatement)
• France grandparent-to-grandchild abatement: 1,594€ (structurally penalizing skip transfers)
• France assurance-vie: 152,500€ per beneficiary (article 990I, premiums before 70) operates outside the standard succession schedule

The exception that nuances the picture: 17 US states impose their own estate or inheritance taxes with much lower exemptions than the federal schedule (Massachusetts and Oregon: $1-2 million; Washington: $2.193 million). The federal exemption alone therefore overstates the operative threshold for residents of these states.

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Why it happens — the macro mechanism

Three structural channels explain the divergent treatment of wealth transfers across jurisdictions.

Channel 1 — The exemption-vs-abatement design choice. The US system uses a high exemption with steep cliff (no estate tax until $15 million, then 40% flat). The French system uses a low abatement with progressive schedule (5% from the first euro above 100,000€, rising to 45% above 1.8 million€). The economic effect is that US estate taxation concentrates on the top fraction of estates, while French succession taxation reaches a much broader segment of the upper-middle class.

Channel 2 — The non-revaluation problem. France’s 100,000€ abatement has been frozen since 2011, while cumulative inflation over the period exceeds 25%. This produces real-value erosion of the abatement, mechanically increasing the share of estates exposed to taxation. The same mechanism affects the bracket thresholds, all unchanged for over a decade. The pattern is “fiscal drag” — taxation rises without any explicit policy decision, simply through inflation.

Channel 3 — The vehicle-specific exemptions. France’s tax architecture provides parallel exemptions through specific vehicles: assurance-vie at 152,500€ per beneficiary (article 990I CGI for premiums before age 70), Pacte Dutreil for family business transmission (75% exemption under conditions), and démembrement (separation of usufruct and bare ownership) reducing taxable transmission value. These vehicles materially reduce effective tax burden for estates that mobilize them, but require active planning. The US equivalents are ILITs, GRATs, family limited partnerships and dynasty trusts — also requiring active planning to deploy.

Synthesis by regime: in inflationary regimes, the French system mechanically captures more estates absent abatement revaluation; in deflationary or stable-price regimes (rare since 2010), the structure is fiscally neutral; the US system, having indexed exemptions to inflation since 2018 and now enshrined permanently at $15 million by OBBBA, is structurally insulated from inflation drag at the federal level (state estate taxes often lack such indexation).

The two estate tax architectures answer different questions: the US asks “is this estate large enough to tax?” while France asks “what fraction of this transfer should be taxed?” — producing fundamentally different planning calculus.

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What it means for different economic actors

US households below $15 million net worth. Federal estate tax exposure is structurally absent at the federal level from 1/1/2026 onwards. Planning focuses then on income tax basis step-up, beneficiary designations, and state-level estate taxes if applicable.

US households above $15 million. The OBBBA’s $15M permanence preserves planning continuity. Lifetime gifting, ILITs to fund estate-tax liquidity, and GRAT/IDGT structures remain core tools. The OBBBA eliminates the rush-to-gift incentive that the prior 2026 sunset created.

French households with estates 200K-2M€. The structural fiscal drag combined with low abatement creates significant exposure. Assurance-vie transmission planning (152,500€ per beneficiary outside standard succession) becomes a material lever. Cross-jurisdictional families face additional complexity from US-France inheritance treaty interactions.

A common error is to assume the high US federal exemption means estate planning is irrelevant for moderate wealth. The state-tax overlay, the income-tax basis step-up complexity, and beneficiary designation mechanics all remain consequential at lower wealth levels.

Practical observation

Go deeper

Questions liées

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Frequently asked questions

What changed with OBBBA in 2025-2026 for US estate taxes?

The One Big Beautiful Bill Act, signed in July 2025, made the federal estate, gift and GST exemption $15 million per person ($30 million per couple) starting January 1, 2026, with future indexation for inflation. This eliminates the previously scheduled 2026 sunset that would have reverted the exemption to approximately $7 million per person. The 40% flat rate above the exemption is unchanged. The practical effect is to remove the urgency around lifetime gifting that had built up in 2024-2025 in anticipation of the sunset, while preserving the planning architecture for estates above the threshold.

Why does France’s 100,000€ abatement matter so much?

The 100,000€ abatement applies per parent, per child, on direct-line transfers, and resets every 15 years. It has been frozen at this level since 2011, while cumulative inflation over the period exceeds 25%, eroding its real value by a similar share. As the abatement remains static while estate values rise (notably real estate, with French residential prices materially up since 2011), the share of estates exposed to taxation has structurally increased without any explicit policy change. The abatement’s non-revaluation is a documented case of “fiscal drag” — a tax base expansion driven by inflation rather than legislation.

How do US and French estate planning differ structurally?

US planning focuses on threshold management (keeping estates below the federal exemption through lifetime gifting, GRATs, IDGTs, and ILITs) and on income-tax basis step-up coordination. French planning focuses on schedule management (using assurance-vie, démembrement, and Pacte Dutreil to apply favorable separate regimes outside the standard succession schedule). The structural insight is that US tools work primarily by reducing the taxable estate, while French tools work primarily by routing transmissions through tax-favored vehicles that don’t go through the standard succession order at all.

Last updated — 4 June 2026