Bills that pile up, even transfers that add up… The end-of-year celebrations can, in some families, turn into a headache: where to deposit the money received for your children? Answers, in the plural, depending on the purpose of these Christmas gifts, with the help of the La Finance pour tous institute.
Banknote, check or bank transfer… Cash gifts are no exception. A few years ago, a “Christmas study” by Deloitte even placed money as the No. 1 gift desire of the French for Christmas! How much do minor children receive in money from grandparents or other relatives? Even INSEE does not provide a precise answer to this question…
For parents of children who receive money, this present can be a poisoned gift. It all depends on the sum and the age of the minorexecutive from the outset Pascale Micoleau-Marcel, general delegate of La Finance pour tous (1) : “If it is really a gift, for example 500 euros from the grandparents, it is better to favor a support for educational purposes, such as the Livret A. If a minor receives 5,000 euros, there , it is probably necessary to declare this donation to the tax authorities, and we get out of simple gifts! »
How much can you give to your children or grandchildren without paying taxes?
1 – If it’s only “pocket money”
First case: real “gifts”, of a few tens or even hundreds of euros, which should all the same be deposited in the bank to avoid the banknotes which pile up… In this case, project yourself on an investment long-term is not necessarily the goal of donors. “Even if the minor child is not going to spend this sum immediately, it can be managed as precautionary savings for an adult”, judge Pascale Micoleau-Marcel: ” Explain to the child that the sum exists, on a booklet, and that he can withdraw it in agreement with his parents for a given project. »
What precautionary savings support for a child? Better remunerated than the Livret A – or, at worst, at the level of the Livret A, at 2% – and capped at 1,600 euros, the Livret Jeune is the most suitable precautionary savings vehicle if the child has more than 12 years. Otherwise, in the passbook section where savings are available immediately, at any time, the banks offer the Livret A or “children’s” passbooks, on which interest is taxed but whose rates can sometimes be attractive.
“Children’s” booklets
2 – If it is about learning to save
Offering cash is not always a default choice. Some grandparents or other relatives attach an educational vocation to it, that of learning to put aside, in order to follow the evolution… and to use it later. In this case, too, Pascale Micoleau-Marcel praises the merits of the Livret A: “Certainly, the Livret A does not offer attractive long-term remuneration. However, if the objective is to empower the child, to have an educational support for savings in dribs and drabs, a booklet can be a good solution. Objective of the parents, in this case: to follow the evolution of this savings with the child in order to explain the mechanism of the annual interests, in particular.
1,000 euros on a Livret A, how much interest after 1, 5 or 10 years?
Learn about the stock market for an adult child?
The general delegate of La Finance pour tous also stresses that the relatives at the origin of the gift have the right to suggest support if this corresponds to a desire for financial initiation. “If the child is an adult, this may be an opportunity to discover the PEA Jeune, and to accompany him in the discovery of the actions”, suggests Pascale Micoleau-Marcel, in reference to this new version of the Plan d savings in shares, accessible to young adults still attached to the tax household of the parents.
Is the PEA Jeune already a fiasco?
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3 – If it’s long-term savings
A few years ago, the Housing Savings Plan and its 2.50% annual remuneration guaranteed for more than a decade was a godsend. But… ” The housing savings plan is no longer the miracle product it used to be! as Pascale Micoleau-Marcel points out. And this even if the PEL rate goes up in 2023: a PEL opened in January will be remunerated at 2% gross with taxed interest from the first year, i.e. 1.40% net. “It remains a good way to put money aside, regularly, for a child”, judges all the same the general delegate of La Finance pour tous.
Who has an interest in opening the new PEL to 2%?
In the very long term, Pascale Micoleau-Marcel advises against the retirement savings plan for children. The fact that the purchase of the main residence is the only way out of this investment, before retirement, according to her disqualifies the PER for child savings. Or only “if you have exhausted all other options”.
What about life insurance which, taken out in the name of the child, does not restrict withdrawals? “It all depends on the size of the sums but, on the practical aspects, life insurance is not necessarily the most suitable support for New Year’s gifts because the parents will have to manage this support, keep an eye on the evolution of the ‘saving. It could be a poisoned gift. Why not, but only if it is a question of bringing together these family donations on the same life insurance contract, year after year?. »
How much is children’s life insurance worth?
Can you take risks with your children’s savings?
Faced with the current instabilities, it is difficult for parents seeking to grow their children’s savings to find support that is both risk-free and profitable. Under these conditions, can you take a dose of risk with your children’s savings? ” The legal administrator is required to take prudent, diligent and informed care in the management of the minor’s property, in the sole interest of the minor. “, answers the civil code. Forbidden to “flambé”, therefore, but nothing prevents you from taking measured risks. “Freedom, yes, but freedom not to squander! summarized in this regard the notary Me Jean-Michel Mathieu with MoneyVox in 2018.
If you ever bet on life insurance, as long-term support for all of a child’s savings, Pascale Micoleau-Marcel reminds us that “paying 100% into the fund in euros”, support without risk of life insurance, is “virtually no longer possible”: “Especially if it is for a child: the insurer will consider that it is a question of long-term savings and therefore only a dose of risk is advised. Everything then depends on the financial knowledge of the parents, whether you want to manage the unit-linked supports yourself (without capital guarantee) for your children, or whether you prefer the managed management option.
Can you speculate with your children’s savings?
(1) La Finance pour tous is the brand of the Institute for Public Financial Education (IEFP), an independent association approved by the Ministry of National Education for its vocation of financial education, but which is supported in particular by “the Banque de France, the Autorité des Marchés Financiers, the French Banking Federation, as well as major financial institutions”.