How much tax does the tax authorities deduct from an inheritance? MoneyVox offers you a series of 3 practical cases on inheritance tax produced by Maître Patrice Bonduelle, notary in Paris. Here is the example of a 78-year-old widower who owns 377,000 euros. How much will he be able to pass on to his three nephews and nices in the end? Part 2.
The French are allergic to inheritance rights. However, according to the Observatory of inequalities, the vast majority of inheritances are exempt from taxation. At the request of MoneyVox, Maître Patrice Bonduelle, Paris notary, has carried out several practical cases. A way to present the options available to you and to make the right tax choices when the situation arises.
Succession: it is not necessary for the couple to anticipate a transmission to the children
The situation
A 78-year-old widower, childless, without property but with 377,000 euros of ct on various accounts including 150,000 euros on two life insurance policies. All premiums were paid after the insured’s 70th birthday. He wishes leave this patrimony equal to his three nephews and nices.
How will the succession between the three nephews and nices unfold?
The life insurance premiums were all paid after the insured’s 70th birthday and are therefore included in the estate assets according to article 757 B of the General Tax Code (CGI). The overall applicable allowance is 30,500 euros. The taxable transmitted value will therefore be 119500 euros (150000 30500). Each beneficiary of the estate will therefore have to declare 39,833 euros.
With regard to cash with a value of 227,000 euros, each of them will receive 75,667 euros, for a total of 115,500 euros (39,833 + 75,667) per beneficiary.
This amount should be subtracted from the allowance provided for nephews and nices. It will amount to 7967 euros, i.e. a tax base of 107533 euros (115500 7967), to which is applied the rate of 55% provided for in the indirect line for nephews and nices.
The tax will be 59,143 euros per nephew and nices, or 177,430 euros in total.
The taxation of life insurance in the event of death
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Should the donation be preferred?
The uncle can do today (before his 80th birthday) a donation of sums of money each of his nephews and nices of 31865euros and thus benefit from a special donation allowance which is added to that applicable to the estate (art. 790 G CGI).
At death, there are only 187,168 euros left [(227000 (31865 + 7967)] of cash transferred, ie 62,389 euros each, to which must be added the sums of the two life insurance policies (39,833 per beneficiary), for a total of 102,222 euros.
At the rate of 55%, the tax will amount to 56,222 euros per heir, ie a total of 168,667 euros.
Conclusion
The advance donation saved 8,763 euros (177,430 to 168,667 euros), explains Maître Patrice Bonduelle
Inheritance tax: calculation, deductions, payment…