Stone, reader of Capitaladdresses the following question: “Hello, has a person who transferred his life insurance to that of his son is taxable on this sum?” Thank you for your answer. ” Hello Pierre, and thank you for your question, which allows us to return to frequent confusion: there is indeed no “transfer” mechanism of life insurance from one person to another, even to a person of your own family.
As Mathilde Carrier, investment advisor and wealth explains, “We cannot transfer life insurance. The insured must go through the stage of a total or partial withdrawal (called “redemption” in life insurance, note), pay the corresponding taxation, then take out another contract in the name of his son, if he is a minor “. The procedure is also similar if the child is major and already has his own life insurance: it will be necessary to make a buyout on your contract, then give him donation of this sum so that he can pay him on his.
Impossible to transfer life insurance between two people
In these two scenarios, you will therefore have to pay taxation at the time of withdrawal. If your contract is less than eight years old, taxation will amount to 30% on the part of your withdrawal corresponding to the gains, what is called the single lump sum (PFU, or flat tax). If the contract has already celebrated its eighth anniversary, you will however benefit from a reduction of 4,600 euros annual on your earnings (if you are single, 9,200 if you are married or Pacsé). It is only beyond this amount that the taxation will apply, with a reduced levy rate (24.7%, including 7.5% non-liberating lump sum and 17.2% of social security contributions) up to 150,000 euros.
The transmission of your lifetime to your son is more advantageous
Second step: transmission to your son. If you give him this sum, it will be a manual money donation which must be declared to the tax administration. He may benefit from a reduction of 100,000 euros (renewable every 15 years), or the specific family donation system exempt up to 31,865 euros under conditions, a right again rechargeable after 15 years. Note that for a major child, these two abatements are cumulative, for a total, therefore, of 131,865 euros.
In summary Pierre, you cannot directly transfer life insurance to your son. It will first be necessary to take over on your own contract. It is then that taxation may be the heaviest for you if your contract is less than eight years old. On the other hand, you benefit from a substantial reduction in transmitting the sum recovered during your lifetime to your adult child.
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