The Livret A (tax-free savings account) sits at the heart of French financial life, offering instant liquidity, government backing, and that precious tax-free status. For parents eyeing its €22,950 ceiling, opening an account in their child’s name can feel like discovering a hidden compartment in their financial toolbox. But this apparent loophole leads straight into a maze of legal obligations and ethical questions that few parents fully grasp.
The Temptation: An Extra Tax-Free Envelope
Many parents approach the Livret A enfant (child’s Livret A) with a simple equation: one more tax-free account equals more family financial flexibility. The logic seems sound, deposit money under the child’s name, earn tax-free interest, and withdraw when family needs arise. Some even view it as a short-term cash management tool rather than genuine savings for their offspring.
This thinking aligns with broader trends. French savers recently pulled €2.12 billion more from their Livret A accounts than they deposited in 2025, marking the first net outflow in a decade according to Caisse des Dépôts data. The search for financial optimization runs deep, and parents feel the pressure to maximize every available vehicle.
But the legal reality diverges sharply from this practical math.
The Legal Framework: It’s Not Your Money
When you deposit funds into a Livret A opened under your child’s name, French law treats this as a don (gift). The money becomes the child’s property, irrevocably. Parents act as administrateurs légaux (legal administrators), not owners. This distinction carries concrete obligations and restrictions.
The official guidance from service-public.fr couldn’t be clearer: parents may use the funds only for dépenses qui concernent directement l’enfant (expenses that directly concern the child). Eligible expenses include:
– School supplies and registration fees
– Medical costs not covered by insurance
– Sports activities, music lessons, tutoring
– Essential clothing and personal items
What doesn’t qualify? Mortgage payments, family groceries, utility bills, or that weekend getaway you promised yourself. Using the money for general family expenses crosses into abus de confiance (breach of trust) territory, potentially exposing parents to legal action.
The Grey Zone: What Actually Happens in Practice
Despite clear legal boundaries, many parents operate in a grey zone. Financial professionals acknowledge that small, occasional withdrawals for family cash flow issues rarely trigger consequences, especially when amounts remain modest and parents maintain good records.
One common pattern involves parents treating the account as a revolving fund: withdraw €200 to cover an unexpected bill, repay it a month later. The low sums involved and the family context mean authorities rarely intervene. However, this practice rests entirely on trust and good faith. If a family dispute erupts or the child later questions the account’s balance, parents face an uphill battle proving their withdrawals served the child’s interests.
The risk escalates with larger amounts or systematic use. Courts have ruled that regular transfers from a child’s account to a parent’s account constitute faute de gestion (mismanagement), even when parents claim they were safeguarding the money.
Age-Specific Rules: The Clock Is Ticking
The rules shift as your child grows:
– Ages 0-12: Parents manage the account completely. The child cannot access funds independently.
– Ages 12-16: The child may withdraw money with parental authorization, typically for personal expenses.
– Ages 16-18: Parents lose withdrawal rights entirely. The law requires you to capitaliser (let the capital grow). You can still deposit funds, but taking money out becomes legally questionable.
– Age 18+: The account belongs fully to the adult child. They gain complete control, and parents have no legal standing to access the funds.
These thresholds matter. A parent who withdraws €5,000 when their child is 17 faces far greater legal risk than one who withdraws the same amount at age 15.
The Real Risks: Beyond Family Drama
The consequences extend beyond disappointed children. French tax authorities can requalify withdrawals as dons à ascendents (gifts to ascendants), triggering tax penalties. While rare, cases of abus de confiance can result in criminal charges, particularly when large sums disappear or parents cannot document legitimate child-related expenses.
Family conflict represents the most common catalyst for problems. During divorce proceedings, one parent might scrutinize the other’s management of children’s accounts. Inheritance disputes can also shine a harsh light on historical withdrawals. Without meticulous records proving every euro served the child’s interests, parents risk repaying the entire amount plus interest.
Smarter Alternatives: Keep Control Where It Belongs
Financial advisors consistently recommend separating parental savings from children’s accounts. For tax-efficient savings you control, consider:
Assurance-vie (life insurance) in the parent’s name: Offers tax advantages after eight years, higher returns than Livret A, and you retain ownership. Some contracts allow designating the child as beneficiary while keeping control during your lifetime.
PEA (Plan d’Épargne en Actions): For longer-term savings, this stock market wrapper provides tax benefits and remains firmly in your name.
Simple savings account: For short-term needs, a standard compte sur livret in your name eliminates all ambiguity.
These vehicles avoid the legal gymnastics and family tension inherent in misusing a child’s Livret A.
Practical Takeaways
If you already have money in your child’s Livret A that you intended for family use, consider these steps:
- Document everything: Keep receipts, school invoices, medical bills that justify withdrawals.
- Limit withdrawals: Stay under €500 annually unless you have ironclad documentation.
- Communicate transparently: Older children should understand how their account supports their needs.
- Plan the transition: As age 16 approaches, stop withdrawals and start treating the account as truly the child’s property.
- Consider a clean break: If the account balance reflects more parental than child savings, discuss transferring it to a proper parental vehicle.
The Livret A enfant works beautifully for its intended purpose: teaching savings habits and building a modest nest egg for your child’s future. Treating it as a family slush fund transforms a simple savings tool into a legal liability. The €22,950 ceiling tempts many, but the potential cost to family trust and legal standing far outweighs the modest tax savings.
For parents seeking every financial advantage, the real optimization lies in using the right vehicle for the right purpose, not in bending the rules of accounts designed to protect children’s assets.
