Gisèle, reader of Capitalasks us the following question: “Between life insurance or gold coins, which is better to pass on to my great-grandchildren in terms of taxation, after age 82?”
Hello Gisèle, and thank you for your question. It will allow us to compare the taxation of two investments often favored for transmission, life insurance and investment gold (coins or bars). The rules that apply differ greatly.
With life insurance, your great-grandchildren will benefit from a tax reduction
Let’s start with life insurance. For premiums paid after your 70th birthday, this savings product benefits from a specific tax regime, provided for by article 757 B of the General Tax Code. The latter provides for an overall reduction of 30,500 euros to be shared among all beneficiaries. This reduction only applies to payments (the capital you have invested). The interest and capital gains generated by the contract remain completely exempt from inheritance tax, which constitutes a significant advantage if the contract has had time to grow, between your 70th birthday and your death.
In practice, if you invest, for example, 50,000 euros at age 82 and the contract reaches 65,000 euros upon your death, your great-grandchildren will benefit from thereduction of 30,500 euros on the premiums paid. The remaining 19,500 euros payment will be subject to inheritance tax. As for the 15,000 euros of interest, they will be transmitted without any taxation. This is provided that you have correctly designated your great-grandchildren in the beneficiary clause of your contract!
Gold is subject to inheritance tax
For their part, gold coins and bars do not benefit from any specific inheritance tax regime. They are integrated into the deceased’s overall assets and subject to the classic rules of inheritance tax. Each direct heir has a reduction of 100,000 euros (renewable every 15 years), but for great-grandchildren, it is the reduction applicable to “other heirs” which applies, i.e. only 1,594 eurosbefore a 55% tax.
In other words, to use the previous example, let’s imagine that you want to pass on coins worth 65,000 euros to two great-grandchildren. Each must therefore receive 32,500 euros. Once the reduction of 1,594 euros has been deducted, there remains 30,906 euros imposed on inheritance tax, which will therefore amount to 16,998.30 euros per heir. As you can see, passing gold directly to your great-grandchildren is very costly fiscally. In your situation, if your objective is to optimize taxation for your great-grandchildren, life insurance remains more advantageous than gold, even after age 70.
To anticipate things, you can, however, now make a donation of your gold coins to your great-grandchildren during your lifetime. In this case, you benefit from a reduction of 5,310 euros per great-grandchild, renewable every 15 years.
