“When I inherited from my parents two years ago, we had finished paying our house and our savings were comfortable,” recalls Eliane, 67, who regrets: “I should have given up the inheritance at profit of my children. Today, I will give them back these funds: the transmission will be taxed twice, whereas the sums could have “skipped” a generation “. Like Eliane, the French inherit, on average, over the age of 50, when they are already well established in life. Grandparents therefore often have an interest in transmitting at least part of their property directly to grandchildren – who need it more – to avoid two successive applications of transmission rights. But how to achieve this “generation leap”?
Give during your lifetime, more tax-efficient
In the event of an inheritance, the sums transmitted to the grandchildren are only exempt from tax up to the amount of 1,594 euros (beyond that, they are subject to the scale opposite). By promoting them during his lifetime, we can however give them large sums without any tax! First, on every special occasion – birthday, Christmas, exam, wedding … – we can offer “customary gifts” without declaring anything, provided that the amount remains proportional to our resources. In addition, every fifteen years, each grandparent can give each grandchild 31,865 euros tax free (63,730 euros for a couple). These donations can be made in the form of money, real estate (or their usufruct – temporary or permanent -, or their bare ownership), shares in SCI, etc. And that’s not all. If you are under 80 and the grandchildren are over 18, you can allocate an additional 31,865 euros every fifteen years by check, cash or transfer (“family donation of money”). These two allowances of the same amount can be combined: a couple can therefore give 127,460 euros without tax every fifteen years to each grandchild! In practice, these donations must be declared within one month at the beneficiary’s tax office (form N ° 2735). Beyond the exempt amounts, “the donor has an interest in paying the transmission rights himself, because it is not considered as an additional donation”, adds Bertrand Tourmente, founder of Althos Patrimoine.
And the inventory of tax gifts is not finished: since July 15, 2020 and until June 30, 2021, an exceptional additional exemption system has been put in place to support the construction sector and companies after the crisis of Covid-19: you can thus give at this time – even if you have already taken advantage of all the abatements already mentioned above – 100,000 euros to a child, grandchild or great-grandchild without any tax if the beneficiary uses the amount in the following year to build their main residence, to carry out energy renovation work (work eligible for MaPrimeRénov ‘), or to create or develop a business with fewer than 50 employees. Who says better ?
Avoid conflicts at the time of succession
If the form filed at the tax office is sufficient for small donations, professionals advise to formalize large gifts by notarial deed. “The notary can advise you to add specific clauses, such as the obligation for the grandchild to invest the sums in a medium without risk and without making withdrawals up to a given age”, illustrates Yves Gambart de Lignières, independent wealth management advisor. And above all, it will help you limit inheritance disputes. Indeed, the donations to the grandchildren are charged against the “available quota” (the part of the patrimony which one can dispose freely). The notary will therefore check that they do not risk affecting the “hereditary reserve” (part of the inheritance from which one cannot deprive one’s children, ie for example, two thirds of the patrimony if one has two children). “Please note: with a classic donation, the value of the donated property is reassessed on the death of the donor,” warns Catherine Costa, director of wealth management solutions at Natixis Wealth Management. Example? If a grandchild invests the 50,000 euros that he receives from his grandfather successfully and that they “become” 300,000 euros, heirs with reservations (his uncles and aunts, for example) can argue during the succession. that the cherub has received 300,000 euros, and if this amount exceeds the available portion, initiate a “reduction action” to obtain reimbursement of the excess! To rule out such a dispute, bring together children and grandchildren, and explain the motivation There is always a psychological part in inheritance conflicts: the intermediate generation can feel aggrieved when they do not have a real need for the inheritance, but for the emotional recognition it provides. an additional guarantee seems necessary, encourage your children to sign at the notary an “early renunciation of action in reduction” for the benefit of their blond heads or their nephews and nieces.
Carry out a “transgenerational-donation-sharing”
Another way to prevent difficulties? Sign a donation-sharing to distribute property between children and grandchildren: the value of the property will be frozen at the time of the notarial deed, and can no longer be reassessed. When the sharing is “transgenerational”, the grandchildren can receive goods in place of their parents if the latter so wish. Each child should receive the same amount, and can choose to keep everything, share with their own children, or leave everything with them. “Have you ever given property to some children?” You can completely include them in such a donation-sharing to freeze their value and re-establish equality with branches that have not yet received anything, ”explains Catherine Costa. Finally, if you are transmitting real estate, think about “dismemberment”: in the same act, you can grant usufruct to the children – they will benefit from the goods or the rents – and bare ownership to the grandchildren.
Bequeath goods to his grandchildren
“Unless they represent their predeceased parent, grandchildren do not inherit from grandparents, unless the contrary is provided in a will,” recalls Yves Gambart de Lignières. “In this case, we can bequeath to them an amount equivalent to the available quota, if the latter has not already been used, in particular to favor the spouse”. Alternative to pass goods to the second generation? Bequeath property to his children, with the constraint of passing them on, during their own succession, to their own children (or to their nephews or nieces for those who have no descendants). We speak of “gradual bequest” when the property must be fully preserved (for example, a house or a family jewel). Or “residual bequest”, if only what remains at the time of the succession of the first beneficiary must pass to the next generation (for example the balance of the price of an apartment sold). On the tax side, a gradual or residual bequest to a child without a descendant (first beneficiary), with the children of other children as second beneficiaries is interesting: at the estate of the first beneficiary, the rights are calculated according to the family relationship between the testator initial (the grandfather) and the grandchildren, and not according to the severe scale between uncle and nephew (55% tax after deduction of € 7,967). Ultimate precision? If you are the “middle” generation yourself, you can give up your parents’ estate and let your children inherit for you. If you have not already benefited from the reduction of 100,000 euros over the past fifteen years, your children can share the exemption. Please note, the process is irrevocable, and we cannot give up only certain assets, nor intervene to distribute the assets! “On the other hand, renouncing to inherit from his parents does not prevent them from remaining beneficiary of their life insurance contract”, adds the specialist.
Thanks to Catherine Costa, Wealth Solutions Director at Natixis Wealth Management, Yves Gambart de Lignières, independent wealth management consultant and Bertrand Tourmente, founder of Althos Patrimoine.
Read also :
⋙ Donation: what you have the right to do
⋙ Gradual and residual donations, think about it!
⋙ The succession drags on, what to do?