Exclusive surveys, practical advice for passing on your assets, protecting your loved ones, managing an inheritance as best as possible, the new special issue of the INC magazine, 60 million consumers, has just been released on newsstands. Details from Amin Meslem, section manager at the magazine.
franceinfo: The first thing to know to properly prepare your succession is that you have to anticipate. If no action is taken, the law will apply. Your death is not necessarily as you would have liked…
Amin Meslem: If you have not made any special provision, in the form of a donation or a will, it is the law which will designate your heirs, and which will fix the share of your property going to each one. Your descendants and your surviving spouse will then succeed you in priority.
If you are not married, your children or grandchildren will receive your entire estate, excluding all other heirs. And if you do not have children, it is your parents, brothers and sisters, nephews and nieces who will recover your property. And finally the State will be your successor, ultimately, if you have neither close relatives nor distant family.
Inheritance tax is the most unpopular tax among the French, because it must be said that the State has a heavy hand?
Yes, with the exception of the spouse or PACS partner, or, under certain conditions, the brothers and sisters of the deceased, all other heirs must pay inheritance tax. Their inheritance is, however, only taxable if they exceed the deduction granted to them by law, this depending on the relationship with the deceased.
And then, the tax authorities apply a rate which ranges from 5 to 45% depending on the amount of the taxable inheritance, for direct line inheritances. If the amount of inheritance after deduction is between 152,325 and 922,000 euros, you will have to pay 57,038 euros in inheritance tax. And if the amount is greater than 1.8 million euros, you will have to pay 237,606 euros.
Are there ways to reduce the tax burden?
So passing on living assets is a good way to reduce inheritance taxes. Donations benefit from the same taxation as inheritances. So each parent can give up to 100,000 euros to each of their children tax-free, and even up to 259,325 euros to a disabled child.
In addition, these reductions are replenished every 15 years. Which means that by getting started early, you can benefit from this system several times.
It’s not just the State that helps itself, there are the banks too. You even speak of indecency 60 million consumers?
Indeed, to close the accounts of their deceased customers, many banks charge high commissions. We calculated the inheritance fees charged by 11 major banks. Result, for a credit of 3,000 euros, its costs go up to 300 euros depending on the establishments and the same 602 euros for a credit of 30,000 euros.
And some banks even go so far as to charge higher fees for two banking products held in the establishment, including life insurance which is not included in the estate.
Have you looked closely at funeral insurance? Obviously it’s not a good plan?
Yes, then these products guarantee the payment of a sum of money to the person of their choice to pay for their funeral upon the death of the insured. But too often, the insured contributes at a loss and his beneficiary receives less than the money paid. But in fact, you must keep in mind that these insurance policies are current risk contracts, and not savings contracts. Whatever the amount of the payments, the insurer will pay the capital chosen at the start, even if the subscriber has contributed twice as much. To summarize, the longer we live, the more likely we are to contribute to lost funds.
So, what is the best way to finance your funeral?
The best thing is to save slowly but surely, for example by setting up scheduled monthly payments on a risk-free investment product. The Livret A and the LDDS for example, which benefit from an interest rate of 3% net of tax, until January 31, 2025, and also unregulated bank passbooks, or funds in euros which can be subscribed to via a life insurance contract, are also interesting and risk-free.
Exactly, is life insurance interesting?
Yes, life insurance is a very good tool for transmitting part of one’s assets, because the death capital is not subject to the rules of sharing between the heirs, but goes to the person or people designated as beneficiaries in the CONTRACT. You can therefore choose to reward the loved one(s) of your choice, whether or not they are related to you.
If you are in a civil partnership or live together, does the partner inherit anything?
If you do nothing, your common-law partner or civil partnership partner will not inherit from you, because they are not among your legal heirs. For things to be otherwise, it is imperative to take steps in their favor during your lifetime. You can write a will which will allow you to pass on to your partner the part of your property which will not go to your children, if you have any.
Exactly, can children be disinherited?
No, inheritance law protects your children upon your death, and they will be entitled to a minimum share of your assets, of which you cannot deprive them for the benefit of another person. This part is called the hereditary reserve. It is equal to half of your assets if you have one child, two-thirds if you have two, and three-quarters if you have three or more.
Can you refuse an inheritance?
Yes, inheriting is not automatic, and it is possible to renounce an inheritance, in particular because the deceased has accumulated debts. Then the waiver must be made officially by a notary, or via a form filed with the court registry.