Yvan, reader of Capitaladdresses the following question: “Hello, the after 70 years that exceed the reduction of 30,500 euros deducted from the classic reduction of 100,000 euros per child? Thank you for your answer. ” Hello Yvan, and thank you for your question, which will allow us to specify a rule which can be a source of confusion between life insurance and “classic” succession.
For payments made after 70 years on a life insurance contract, the general tax code (article 757 b) provides for a global reduction in 30,500 euros. This reduction applies to all the designated beneficiaries, so it must be shared with each other. Note that for the payments made after 70 years, only the part corresponding to the holders of the holder are subject to taxation, any gains are exempt.
The reduction of 30,500 euros: a specific life insurance system
Once this reduction is proper to the life insurance used, the share of payments exceeding the abatement is integrated into the succession of the deceased. In other words, these sums are added to the global estate heritage, which includes other investments, money from booklets and current accounts, real estate, etc. The whole thing is therefore divided between the legal heirs, according to the usual scale of inheritance tax.
And therefore, good news: since the sums resulting from life insurance are reinstated in the succession, they benefit from the expected duct in direct line, which is also called “personal abatements”. This deductible is for example 100,000 euros per child (renewable every 15 years). “These abatements are well accumulated. To find out the amount of rights, we determine the taxable share of inheritance tax on bonuses paid after 70 years (after deduction of the share of the reduction of 30,500 euros returning to each beneficiary), then we apply the ordinary laws ”, Confirms Elise Moras, director of heritage studies of Financière Meeschaert.
Payments after 70 years: life insurance reinstated in the estate
Take this example to see more clearly. Imagine a person who paid 100,000 euros on their life insurance after 70 years. On his death, the total held on his life insurance reaches 150,000 euros: 100,000 euros in payment and 50,000 euros in interest. This person has appointed a single beneficiary: his child, to whom must return the sum of 150,000 euros. We can already deduct the 50,000 euros corresponding to the gains, because they are exempt. There remains 100,000 euros. 30,500 euros are exempt thanks to the specific life insurance reduction. The remaining 69,500 euros are reintegrated into the succession. As the beneficiary is the child of the subscriber, he will be able to deduce from these 69,500 euros his inheritance reduction of 100,000 euros. He will therefore have no inheritance tax to pay on the entire amount sent.
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