Without children or spouse, who inherits and at what cost? Often complex and highly taxed, this type of inheritance can turn into a financial nightmare for your loved ones. A notary explains to us the tax mechanisms to activate to protect those you love.
Over the last twenty years, according to INED figures, the proportion of adults who do not want to have children has doubled. If we add to this cases of infertility or loss of a child during life as well as celibacy, the question then becomes essential for many French people: how does an inheritance happen when you have no child or surviving spouse? Who inherits in the eyes of the law? How much will inheritance tax be?
Unlike a classic situation, with direct descendants, these procedures can prove more complicated for other heirs… who bear much heavier taxes. Maître Mathilde de Legge de Kerlean, associate notary in Paris and specialist in family law, sheds light on how these successions take place and on the strategies to put in place to maximize the benefit of the legatees.
In the absence of a will, the civil partnership partner or cohabiting partner is not entitled to anything. The law then turns to the family still alive: the parents (a quarter each) and the brothers and sisters (the remaining half). Parents benefit from a reduction of 100,000 euros each, compared to 15,932 euros for siblings, with a progressive tax capped at 45%. In the case where the parents and brothers and sisters are no longer in this world, we then move on to the nephews and nieces. But “It’s a tax that is much heavier, because they have a deduction of only 7,967 euros, and they are taxed at 55%.” However, there is a situation in which the latter can benefit from the same advantages as brothers and sisters: legally, this is called representation. “Let’s imagine that the deceased has a deceased brother, who has children, and a sister who is still alive. So that it is not the sister who inherits everything, the nephews and nieces come to represent their father in the succession. They therefore inherit in the same way as their aunt who is still there, with the taxation applied to the siblings”explains Mathilde de Legge.
And what about an estate where the deceased has no children, no longer has his parents, and never had a brother or sister, and therefore no nephews and nieces either? “I’ve never seen it in practice.”the notary tells us, but there is indeed a solution in these rare cases: “We divide the inheritance in two: we take the paternal and maternal lines, and we will look at the cousins in each line, to find the closest in degree. If you only have one great-aunt still alive, she is the one who inherits.“But beyond the fourth degree, the heirs must pay 60% inheritance tax. The same goes for any other legatee designated by the will, who is not related to the deceased: this can be a friend or even step-children. “That hurts, because they are strangers in the eyes of the law, regardless of the emotional connection with the deceased.” The expert also gives us three solutions to reduce the tax bill.
The first is the dismemberment of ownership, that is to say giving bare ownership of a property during one’s lifetime, while retaining the usufruct (one continues to live there or receive the rent). Upon death, the usufruct ends and the beneficiary becomes full owner without additional costs. The second solution is that of life insurance: “It’s great because we put the person we want as a beneficiary. And we can transmit up to 152,500 euros per beneficiary, if the premiums are paid before age 70.” Finally, the third option is to establish as universal legatee an association recognized as being of public utility, which will in turn be responsible for delivering a legacy for the benefit of the chosen beneficiary, net of costs and duties. If Mrs. But if Mrs. The difference? It is the association which pays the rights (calculated on the nephew’s share) and keeps the rest, i.e. around 30,000 euros. Result : “The heir receives as much, but we pay less to the State, and we have rewarded an association that is close to our hearts in the process.”
