Hand down part of your assets in favourable conditions, today.
An agreement is a means to specify, without fees or intervention from a notary, how to use your gift. The agreement stipulates that this gift was made on the condition that the amounts gifted shall be paid on a life insurance policy.
If you have compulsory heirs (descendants, and in the absence of descendants, the spouse), they cannot be deprived of a portion of your estate, called the "legal reserve") (determined by the Civil Code). It is therefore preferable, in order to avoid any futures disputes, to make gifts in accordance with your legal reserve and not to exceed the available share.
* Free, no-obligation deed that does not require a notary
** Based on taxation in force as of 01/09/2012
What are the roles of the beneficiary and donor ?
The beneficiary is the person to whom you make a gift (your child or grandchild for example). The donor is you !
As a donor, can I make several payments ?
Of course! Each new payment is equivalent to a new gift. You only need to make sure of the total amount of these successive gifts, because the tax authorities take into account the full tax allowance. In the event of a gift to a child, the combination of these gifts should not exceed €100,000* for 15 years so as to qualify for total exemption from transfer duties. In the event of a gift to a grandchild, this allowance amounts to €31,395*.
Why is it recommended to perform a gift ?
A gift is a tangible asset (money, for example) made from one person to another that does not require any special administrative formality. There is no obligation to see a notary in order to do so, only a declaration to the tax authorities is required.
In addition, the advantage of a gift is that the taxable amount (meaning the value of the given asset) is stopped on the day when the gift is communicated by the beneficiary to the tax authorities. If the gift is declared several years after it is made, the retained value is that on the day of the declaration. If the asset has a high value, the transfer duties may therefore be higher.
Finally, an additional advantage is to benefit from a reduction in duties related to the age regarding gift. If, for example, the gift is made when you are 50 years of age and the amount exceeds the allowance, the transfer duties shall be reduced by 50%. If this same gift is made 20 years later, the reduction in transfer duties can only be 30%.
What is the taxation of life insurance policy* products ?
During the term of the policy (or subscription) :
As long as no buyback is made, the products** are not subject to income tax. On the other hand, if you are subject to the Solidarity Tax on Wealth (ISF) each year, you are required to declare the buyback value of your policy on 1 January.
Total or partial buyback of the savings :
Only the portion corresponding to the products is subject to progressive income tax, or as an option by the policyholder (or subscriber), a standard income tax rate deduction the rate of which varies according to the term of the policy (or subscription) :
In addition, all policy related products are subject to social levies.
What is the taxation of your life insurance policy in the event of death ?
In the case of death, the capital shall be transferred to any beneficiaries you have designated, under the following conditions :
In addition, if the policy terminates by the death of the insured, the policy related products are subject to social levies.
What is the reserved and available portion of an estate ?
The reserved portion of an estate is part of the estate transmitted to heirs entitled to compulsory portions by law. Since 1 January 2007, only children (or grandchildren) of the surviving spouse are compulsory heirs. Parents are no longer compulsory heirs. Compulsory heirs cannot be disinherited.
The disposable portion is opposed to the hereditary reserve. This is part of the estate of a person that can be freely transferred to persons of their choice in whatever proportions they wished.