Succession: “Are beneficiaries of life insurance opened before 1991 exempt from taxes?”

A reader of Capital wonders about the tax advantages specific to life insurance contracts opened before 1991, in particular in terms of transmission.

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Jean-Marcel, reader of Capitalasks us the following question: “Hello, is it correct that beneficiaries of life insurance contracts opened before 1991 are exempt from all taxes up to 152,000 euros, even for payments made after age 70?»

Hello Jean-Marcel, and thank you for your question. It allows us to return to a complex subject, but may concern a large number of readers: the taxation of old life insurance contracts, in particular those taken out before November 20, 1991. These contracts benefit from more favorable tax rules. But these advantages depend on several conditions.

You have to look more at the date of payments than at the opening of the contract

First of all, it is true that life insurance contracts taken out before November 20, 1991 benefit from a very advantageous tax regime for the beneficiaries, provided that the payments were made before October 13, 1998. If this is the case, the capital transferred following the death is entirely exempt from inheritance tax, whatever the amount. These payments therefore escape all taxation.

As regards the payments you made after October 13, 1998they will be subject to taxation at the time of transmission, but each beneficiary still benefits from a reduction. The latter is 152,500 euros on the capital transferred (article 990 I of the General Tax Code). In other words, your beneficiaries will not have to pay any tax up to this amount. Beyond this reduction, amounts are taxed at 20% up to 700,000 euros, then at 31.25% beyond that.

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As you will have understood, Jean-Marcel, it is therefore more the date of your payments rather than that of the opening of your contract that you will have to look at to find out if your beneficiaries will be totally exempt. On the other hand, the age you were at the time of these payments will have no impact, the reduction of 152,500 euros applying even after your 70th birthday, confirms Thomas Prud’Homoz, associate notary of the study KL Advice: “For contracts taken out before November 20, 1991, the death benefit is exempt from tax if the premiums were paid before October 13, 1998. For payments made after this date, including those made after age 70, a specific reduction of 152,500 euros per beneficiary applies.”

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