Losing a parent brings emotional challenges alongside various administrative duties, especially with upcoming changes in 2025 regarding funeral costs and inheritance thresholds. Notably, the limit for withdrawing funds for funeral expenses will rise to 5,910 euros, and the threshold for recovery from estates under the Old Age Solidarity Allowance will increase. While inheritance allowances remain unchanged, strategies for tax-efficient wealth transmission through regular donations can benefit heirs significantly.
Navigating the Challenges of Losing a Parent
The loss of a parent is an incredibly challenging experience, and along with the emotional turmoil, heirs face a myriad of administrative responsibilities. Starting in 2025, there will be significant updates regarding funeral costs, inheritance, and donations that families must be aware of. Even when a donation occurs during a person’s lifetime, or an inheritance is passed down after their death, certain fees are still required to be settled with tax authorities. Although there won’t be a new finance law for 2025 to freeze the scales for inheritance or donation rights, some noteworthy changes are on the horizon, as detailed below.
Key Changes to Funeral Expenses and Inheritance Thresholds
One of the most impactful changes is the increase in the amount that can be withdrawn from a deceased individual’s bank account to cover funeral costs. Often, funeral expenses become an immediate burden for grieving families. If no specific contract was established, the law permits heirs or designated individuals responsible for organizing the funeral to access the deceased’s funds. Effective January 1, 2025, this withdrawal limit has been raised to 5,910 euros, as per the decree issued on December 3, 2024. This adjustment provides much-needed financial relief, as funeral expenses can escalate quickly.
Furthermore, regarding the Old Age Solidarity Allowance (ASPA), which assists retirees with limited resources, there’s been a revision in the threshold for recovery from an estate after death. As of January 1, 2025, this threshold has been increased to 107,616.60 euros, up from 105,300 euros. Consequently, only heirs of estates beyond this value will face potential recovery claims from the pension fund or state. Additionally, in overseas territories, this threshold temporarily rises to 150,000 euros until December 31, 2029, aimed at addressing economic disparities. This increase significantly benefits families with modest means, allowing them to retain more of their loved one’s estate.
Despite these advancements in funeral expenses and ASPA, the regulations surrounding inheritances and donations remain unchanged in 2025, due to the absence of new financial legislation. Thus, the allowances for direct heirs, such as children or parents, continue as before. Each child can inherit up to 100,000 euros from their parents without incurring inheritance or donation taxes. Any amount above this threshold is subject to taxation.
In addition to the primary allowances, grandchildren can receive up to 31,865 euros from their grandparents, while great-grandchildren are entitled to 5,310 euros. Spouses or PACS partners benefit from a higher allowance of 80,724 euros, and siblings, including half-siblings, share an allowance of 15,932 euros. For uncles/aunts and nephews/nieces, this allowance drops to 7,967 euros. The tax rates for donations and inheritances remain unchanged, ranging from 5% (for amounts up to 8,072 euros) to 45% (for amounts exceeding 1,805,677 euros), applied to the portion of the inheritance or donation that surpasses the specified allowances.
When it comes to wealth transmission, understanding exemptions and allowances is crucial. By making regular donations, individuals can optimize how they pass down their wealth, as these allowances can be renewed every 15 years per donor. For instance, a parent who donated 100,000 euros to their child back in 2010 can donate the same amount again in 2025 without incurring any taxes for the child. Additionally, these donations can accumulate, allowing a child to potentially receive 200,000 euros from both parents and 127,460 euros from four grandparents, totaling 327,460 euros tax-free every 15 years. Furthermore, monetary gifts have a specific exemption of 31,865 euros, provided the donor is under 80 years old and the recipient is an adult at the time of the gift. This strategy can be effectively combined with other allowances, facilitating advantageous wealth transmission.