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How can you help your children or grandchildren? What are the limits ?

How can you help your children or grandchildren? What are the limits ?

Many parents, but especially grandparents, who have capital, are looking for solutions to be able to financially help their children or grandchildren who encounter temporary difficulties, who have to finance their studies, who want to acquire their main residence but who lack means, etc. For those who have assets, helping their children or grandchildren during their lifetime also allows them to plan their succession and best distribute their inheritance. There are many ways to help your descendants who, in addition, can benefit from tax exemptions.

Measures to help financially or materially his children or grandchildren

Money donations

A specific measure, but limited in time, is currently aimed at those who wish to donate money to their children, grandchildren or great-grandchildren in particular. Thus, since July 15, 2020, and until June 30, 2021, these donations of money in the form of cash, transfers or checks are exempt from tax up to 100,000 euros per donor. Namely:in this context, the recipient of such a donation can receive it from several donors.

This tax benefit is nevertheless subject to certain conditions of use of this cash donation. First, the money received must be used within 3 months of its payment. Then, the sums thus transmitted must be used to finance the construction of the main residence of the beneficiary, the realization of energy works eligible for the energy transition bonus in the main residence of the beneficiary, or to be invested in the capital of a small business. managed by the beneficiary who employs less than 50 employees, who has been in business for less than 5 years, who has not yet distributed profits and whose balance sheet is less than 10,000 euros.

Apart from this measure currently in force, two other devices which notably exempt from gift tax can be used by people who want to donate money to their children or grandchildren. First, the “classic” donation which allows a certain amount of money to be given (which varies according to the degree of kinship, 100,000 euros for example for a parent, to each of their children) every 15 years. Or the “family donation of sums of money” which authorizes a donor under the age of 80 to also give every 15 years up to 31,865 euros to each of his adult children, grandchildren and great-grandchildren. .

The donation-sharing

Other possibilities are available to those who have capital and wish to help their children or grandchildren.

This is particularly the case with the donation-partage, a notarial deed, which allows during his lifetime, and as its name indicates, to give and share in an equitable manner his goods or part of them, which can be movable, immovable, sums of money, titles, etc. You decide during your lifetime who will benefit from your estate. It can be just your children, and/or your grandchildren.

In the case of a donation-partage, you have the possibility of keeping the usufruct of the goods you have donated, that is to say, to use them or to receive income from them until your death. This way of helping your children and/or grandchildren during your lifetime does not have many disadvantages. The only one that can be observed is the fact that the donor deprives himself too much for the benefit of his heirs with the risk of no longer being able to finance his own living conditions which can be expensive in old age.

Help your children or grandchildren with life insurance

Life insurance is a good way if you want to help your children or grandchildren financially and ensure their well-being in the future. This involves taking out a contract with an insurer who undertakes, in return for the payment of premiums on your part (the donor) to be paid, following your death, or at the end of this life insurance contract. , a capital or an annuity to one or more persons (the donee) that you designate when signing this contract.

You have the possibility of opening a life insurance contract in your name or that of your children or grandchildren. In the first case, the beneficiary or beneficiaries you have determined are recipients of a lump sum or an annuity after your death. In the second case, your children or grandchildren who are donees become holders of your life insurance when they come of age or at the age you have chosen (but necessarily when they are 25 years old maximum) and choose to manage it as they see fit. (continue the contract or not).

This last solution is rather to be favored if you want your children or grandchildren to benefit from a small capital when they come of age. By taking out life insurance in your name, you have more opportunities to build up more capital (until your death), especially since this capital is tax-exempt for them up to 152,500 euros, for payments you made before you turned 70, however.

You should also know that if your life insurance runs for more than 8 years, you or your beneficiaries can benefit from tax advantages when it is redeemed:an annual allowance on interest of 4,600 euros for a single person and 9 200 euros for a married or PACS couple subject to joint taxation.