Succession: “What are the reductions for my nephews and nieces with life insurance?”

QUESTION – A reader of Capital wonders what inheritance tax her nephew and niece designated as beneficiaries of her life insurance will have to pay. Even if the tax is heavier than for closer relatives, it remains attractive, including after the age of 70.

Capital Video: Succession: “What are the reductions for my nephews and nieces with life insurance?”

Our reader, Rose-Marie, sent us the following question: “Hello, let’s take the example of a life insurance policy opened between the ages of 70 and 75, and whose heirs would be two in number, a nephew and a niece. Will they pay inheritance tax or be entitled to a reduction? Thank you very much for your response.”

Hello to you Rose-Marie and thank you for your question, which, after the grandchildren, allows us to detail the rules which apply in terms of transmission for nephews and nieces. First of all, you should tell us the age at which you took out this life insurance, because an important change occurs after the age of 70.

A reduction of 30,500 euros not to be neglected after 70 years

Once this age is exceeded, payments made towards life insurance no longer entitle you to the same reductions as before the age of 70. In your case, article 757b of the General Tax Code applies. It is therefore to a reduction of 30,500 euros that all the people designated in your beneficiary clause, here your nephew and your niece, will have the right. You can therefore leave them up to 30,500 euros, without them having to pay any inheritance tax, for example 15,250 euros each.

However, beyond this amount, the inheritance tax scale applies. However, before paying it, your nephew and your niece also benefit from a personal allowance of 7,967 euros, under conditions, specifies the economie.gouv.fr site: “that they have not used it in the 15 years preceding the death when making a donation”. In other words, if the reduction has not been used in the 15 years preceding your death following a donation during your lifetime, they may benefit from it to the estate.

Then, once these two reductions have possibly been combined, inheritance tax applies to the remaining transferred amount. For parents up to the fourth degree (excluding father, mother, child, grandchild and brothers and sisters, who also have a specific scale) a single rate applies: 55%. If therefore, Rose-Marie, you wish to leave 30,000 euros to your nephew, the latter – if he is in equal shares with your niece – will benefit from a reduction of 15,250 euros then from 7,967 eurosor 23,217 euros. He will therefore pay inheritance tax of 55% on the remaining 6,783 euros, or 3,730.65 euros.

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