What happens to your accounts and savings books in the event of your death? Do you have to mention the beneficiaries in a will ? Does the money go to the state? Granted, it's not the most fun subject in the world. The question of what happens to your savings in the event of your death is not one you want to think about right now. And yet, as for retirement: it's good to anticipate!
Depending on the savings medium, the terms and conditions and taxation change. We examine the main savings vehicles and what happens in the event of death.
WHAT HAPPENS TO A LIFE INSURANCE POLICY IN CASE OF DEATH?
In France, the death of the subscriber systematically leads to the closing of the contract. The money invested in life insurance is transmitted to the beneficiary(ies) designated on the contract and chosen by the policyholder at the time of subscription. The money of the life insurance does not join the inheritance; this product allows a simplified transmission of its financial inheritance and has an advantageous taxation in case of death. This is why it is one of the preferred investments of the French.
If there is no beneficiary, the euros invested in the life insurance join the estate of the deceased contract holder and are passed on to the heirs.
Good to know: in France, the Ciclade website allows you to find and claim the money that is sleeping on life insurance, savings (PEE, Livret A, PEL) or inactive bank accounts, and of which you are the beneficiary! Complete the steps online and receive the available balance on the accounts and insurance by transfer. 🤩
WHAT HAPPENS TO MONEY PLACED IN AN INDIVIDUAL SAVINGS ACCOUNT IN THE EVENT OF DEATH?
The individual PER (retirement savings plan) is a savings medium. There are two types of PER: the bank one (also called PER securities account) and the insurance one administered by insurance companies directly or through the intermediary of brokerage firms and banks. On the market, it is the insurances PER that are in the majority.
Depending on the type of individual PER, the taxation changes in case of death of the contract holder:
PER insurance 👉 same as life insurance (does not enter the estate assets) only if the death of the subscriber occurs before 70 years. The capital is exempt from tax and inheritance tax within the limit of 152 500 € per beneficiary. After age 70, it becomes part of the estate assets, however a new allowance and new conditions apply when it becomes part of the estate assets.
PER banking 👉 the classic taxation of an inheritance applies.
Good to know : The beneficiaries of a PER insurance are not automatically the legal heirs (spouse, children...); they are designated when the contract is taken out by the beneficiary via the beneficiary clause.
WHAT HAPPENS TO THE MONEY IN A LIVRET A IN THE EVENT OF DEATH?
After a death, the deceased's Livret A passbook is closed and blocked by the bank; it becomes part of the inheritance (the deceased's estate assets). Once the estate is settled by the notary, the euros in the Livret A are divided among the beneficiary heirs according to the wishes of the deceased. The Livret A is therefore subject to inheritance tax and related fees.
Good to know: In France, life insurance and death insurance are not subject to inheritance tax (up to an amount set by law).
WHAT HAPPENS TO YOUR EMPLOYEE SAVINGS IN THE EVENT OF YOUR DEATH?
The death of the holder is a reason for early release of the sums saved in the savings plan. Don't waste time claiming the repayment of the savings: if the request is made within six months of the death, the capital gains are tax-free. Beyond that, they become taxable.
WHAT HAPPENS TO THE PENSION SAVINGS CAPITAL IN THE EVENT OF DEATH?
In the event of death, the capital is distributed among the beneficiaries and/or legal heirs (spouse, child, etc.). Depending on the type of holder's savings (fund or pension), fees and taxes apply.
Pension savings fund 👉 integration into the estate assets. The heirs will therefore have to pay inheritance tax.
Pension savings insurance 👉 outside the estate, but subject to inheritance tax. Taxes may or may not apply, and the amount of levies also varies depending also on the age of death (threshold: 60 years).
You want to save money for the future, but you don't know where to start? Or what are the possible supports and contracts? Because slipping your money under the pillow or the carpet is not the most efficient strategy...