Personal Finance

Transmission: the hereditary reserve and life insurance in the hot seat

Report proposes to review reserve rules and reintegrate life insurance into estates

Announced discreetly by the President of the Republic, Emmanuel Macron, the reform of inheritance law is well in the making. A report on this subject was recently delivered to the Keeper of the Seals, Nicole Belloubet. And it should cause many gnashing of teeth if its main proposals are accepted. The hereditary reserve is thus targeted. This is the rule that obliges to pass on to his children an incompressible part of his heritage. It is 50% if you have only one child, two thirds in the presence of two and three quarters from three.

The report does not change anything in the presence of a single child, but, from two, we will remain at two thirds. In other words, children from large families are at risk of being disadvantaged since their parents will have a larger share available, which they can give or leave as they see fit. Life insurance contracts are expected to pay the price for the reform. They would no longer be, as so far, out of succession. In the future, this should be taken into account to determine whether the subscriber, by depositing part of his assets there, has not damaged the reserve. This would mean avoiding the use of life insurance to inherit his heirs.

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On the other hand, the report does not advocate calling into question the derogatory taxation of life insurance. But if it is legally incorporated into civil inheritance law, it is a safe bet that it could one day be taxed under inheritance tax!

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