Succession: PEL or life insurance? The best solution to transmit to your nephews

In the “big savings meeting” (capital / radio heritage), Amélie Ziegelmeyer, regional director private management at Laplace, lights up an auditor who hesitates between keeping her PEL or transferring it to life insurance to optimize transmission to his nephews.

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Each month, the “big savings meeting” (capital / radio heritage) answers your questions in the “your questions, our answers” sequence. Our experts – notaries, tax -owners, specialists in heritage management – support you on all the issues related to your assets, whether inheritance, investments or taxation. Today, Amélie Ziegelmeyer responds to François (69), who wonders about the best strategy to transmit a capital of 100,000 euros to his 11 nephews. Should we go through his PEL, paid 6% but subject to inheritance tax, or by life insurance, with potentially less yield, but which is transmitted outside inheritance and with more substantial abatements?

The expert first recalls an essential rule: “For the nephews to inherit sums on the PEL, it is imperative to predict a will. In the absence of a provision, it is the wife who will inherit the PEL. ” Then, concerning taxation, Amélie Ziegelmeyer stresses that “The sums of the PEL will not be fully taxed at 55% (inheritance tax applied between uncles and nephews, note), since a Defection of 7,967 euros per nephew first applies for direct nephews, and 1,594 euros for his wife’s nephews. Beyond that, the remaining sums will be well taxed at 55% for its nephews, and 60% for those of his wife. ”

On the long time, the yield of the PEL can compensate for life insurance abatements

Thus, if the succession took place tomorrow, it is life insurance that would be the most interesting from a tax point of view. Because if the 100,000 euros were paid on life insurance before François’ 70 years, “These capital would be exempt from inheritance tax within the limit of 152,500 euros per beneficiary”recalls Amélie Ziegelmeyer. In other words, his 11 nephews would share all of the 100,000 euros without inheritance tax. Conversely, they would only receive 81,560 euros in total in the case of a PEL transmitted immediately, and would therefore pay 18,440 euros in taxation.

However, over long time, if François keeps his PEL, the greater yield can compensate for taxation. “By retaining a net rate of 4.20% for the PEL after tax and a cautious rate of 1.65% for life insurance (2% – 17.2% of social security contributions), it will take 21 years for The PEL compensates for life insurance, and becomes more interesting ”calculates Amélie Ziegelmeyer. In this scenario, the nephews would share 141,457 euros After taxation while retaining the PEL, against 141,011 euros With the conservative yield chosen for life insurance.

This dilemma also raises two unknowns: unlike the PEL, the yield of life insurance is never certain. Nevertheless, the expert recalls that“With life insurance, François also has the possibility of optimizing his placement by diversifying on supports such as monetary SICAVs (between 3 and 3.5%) or structured products with guaranteed capital (up to 5%)”. In other words, without taking too much risk, it is possible to aim more than the 1.65% net taken here. As for the second stranger, it is simply the deadline to which this succession will take place, that is, the date of death of François, which by nature is difficult to determine. In conclusion, taking into account its abatements and the yield that it is possible to target, life insurance is the most advantageous and surest solution, except to be certain that death will not intervene in the next 21 years, before François’s 90s.

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