Marriage or PACS: what financial impact for your couple?

Choosing the right marital lifestyle is not only a question of love and feelings. It’s also a matter of finances. Between marriage, PACS and cohabitation, the differences can be substantial, especially in terms of taxation. But make no mistake, it’s not about choosing a plan to optimize your taxes! It is mainly to help you understand the financial consequences that result from these different choices. So, marriage, PACS or cohabitation, what impact on your taxes and your assets?

The tax advantages of marriage

When we talk about marriage, we often think of beautiful ceremony, with a white dress, the exchange of alliances. But marriage is also a legal regime which offers a certain number of advantages, notably tax ones.

In fact, the husband benefit from joint taxation on their income, which can be favorable if one of the two spouses has lower income than the other. The calculation of family quotient takes into account family expenses, which can also be advantageous. In addition, married couples can also benefit from a reversionary pension in the event of the death of one of the spouses.

PACS and taxation: an advantageous solution

PACS, for Civil Solidarity Pact, is an alternative to marriage which is attracting more and more couples. Simpler and more flexible to set up, it also offers significant tax advantages for your couple.

In fact, the civil partnership partners are, like spouses, subject to joint taxation. This can therefore be advantageous if one of the two has much higher income than the other. However, unlike marriage, civil partnership partners have the possibility, in the first year of their civil partnership, of opting for separate taxation. Which can be interesting if one of the two received exceptional income that year.

The impact of cohabitation on your finances

Cohabitation, this form of living together without formality or legal commitment, can seem attractive due to its simplicity. However, we must not forget that this simplicity has a cost, particularly on a tax level.

In fact, the cohabitees are taxed separately. Each partner declares their own income and therefore cannot benefit from the smoothing effect of the family quotient in the event of income disparity. Furthermore, cohabitation does not entitle you to any protection in the event of death: no survivor’s pension, no advantageous inheritance rights as is the case in the case of marriage or civil partnership.

Heritage and inheritance: which regime to choose?

Beyond the simple question of taxes, the choice between marriage, PACS and cohabitation can have a significant impact on your assets and your inheritance rights.

Marriage offers maximum protection for the surviving spouse in matters of inheritance. Spouses can in fact benefit from a total exemption from inheritance tax. In addition, the surviving spouse has the right, unless otherwise provided, to the usufruct of the entire estate.

Civil partnership partners also benefit from an exemption from inheritance tax, but their protection is less than in the case of marriage, especially if the deceased partner has children from a previous union.

As for cohabitation, it offers no protection in matters of inheritance. The surviving partner has no rights to the estate of his deceased partner.

Ultimately, there is no single answer to the question of choosing between marriage, PACS and cohabitation. Each situation is unique and depends on the objectives and constraints of each couple. However, it is essential to understand the financial implications of each plan before making your choice. Because love is beautiful, but it’s even better when you have clear ideas about your finances!