In summary…
Investing in a assurance-vie policy after age 70 remains an effective way to transfer wealth. Article 757 B of the French General Tax Code (CGI) only subjects premiums paid above €30,500 to inheritance tax. Interest and capital gains are entirely exempt from inheritance tax. On a €100,000 investment, a child can receive €160,000 without paying any tax.
1. What Article 757 B provides
For premiums paid after the insured person turns 70, Article 757 B of the French General Tax Code (CGI) subjects to inheritance tax, according to the relationship to the beneficiary, the portion of the premiums exceeding €30,500. Capitalized income, including interest from the euro fund and capital gains from unit-linked funds, is exempt.
The taxable base is therefore fixed at the amount of the payments. All the performance of the contract between the payment and the death is excluded from the taxable base, without any limit.
2. A total allowance of €30,500
The €30,500 allowance is a one-time benefit per insured person. It covers all their contracts and is divided among all beneficiaries in proportion to their share. The spouse and civil partner, who are exempt from tax, do not use this allowance.
The portion of premiums exceeding €30,500 is added to the estate. It benefits from the €100,000 allowance per child under Article 779, but it uses it up: what is used from the contract is no longer available for the rest of the estate.
3. Concrete example
Situation. A 72-year-old widowed mother, one son, €100,000 in cash in bank accounts. No gifts made to her son.
Issue. She considered assurance-vie unnecessary after age 70. Left in her accounts, these funds and their income would have been entirely included in her estate.
Strategy. She pays €100,000 into a assurance-vie policy, with a clause naming her son as the beneficiary. Upon her death, the policy is worth €160,000. Only the premiums exceeding €30,500 are taxable: €69,500, covered by the €100,000 allowance under Article 779.
Result. €160,000 transferred, €0 in taxes on the contract. €90,500 is excluded from the taxable base: €30,500 allowance and €60,000 in tax-exempt gains. The son retains €30,500 of allowance for the remainder of the estate.
4. Mistakes that reduce the advantage
Assuming the child's tax allowance remains intact. A gift made less than fifteen years ago may have already reduced it: the tax recapture will accordingly reduce the available margin for taxable premiums.
Multiplying contracts in the hope of multiplying the tax allowance. The €30,500 figure applies to all contracts combined.
Confusing the two schemes. Premiums paid before age 70 fall under article 990 I and its allowance of €152,500 per beneficiary; those paid after fall under article 757 B. Each contract is managed according to its scheme.
5. Who is this strategy aimed at?
For savers over 70 who have liquid assets intended for their children and a sufficient investment horizon for the contract to appreciate. The higher the performance between the initial investment and death, the larger the tax-exempt portion. The choice of investment vehicles, the amount of contributions, and the wording of the beneficiary clause are based on the actual estate, including any allowances already used.
Frequently asked questions
Is the €30,500 allowance granted per beneficiary?
No. It is global: a single allowance per insured person, across all contracts and all beneficiaries, distributed proportionally to the amounts received.
Are the gains from the contract truly tax-exempt?
Yes. Article 757 B only applies to premiums paid. Interest and capital gains accrued on the contract are not subject to inheritance tax, regardless of their amount.
What happens if my spouse is a beneficiary?
The spouse and civil partner are exempt from tax. They do not use the €30,500 allowance, which remains available for other beneficiaries.
Are you over 70 and have liquid assets to pass on? Book a wealth management consultation: we will tailor the payments and beneficiary clause for your estate.
