The insured can freely choose the beneficiaries of his life insurance contract in the event of death. They will benefit from an advantageous tax regime. Christophe Vourlat, Head of Private Wealth Development at Swiss Life, explains how to do this.
While there is a good chance that a possible inheritance tax reform will be implemented in the future, life insurance is a simple and effective tool to pass on one’s wealth. Provided you have anticipated it well. As a reminder, life insurance contracts provide for the payment of capital or an annuity on a given date or at the end of the contract if the subscriber is still alive. If this is not the case, the savings that he will have capitalized will go to one or more beneficiaries that he will have freely selected and indicated in his beneficiary clause. This choice makes it possible to stick to the transmission objectives of the subscriber and to designate people who are not necessarily his compulsory heirs, such as his spouse or PACS partner. “A very supervised free choice, since in France, it is forbidden to completely disinherit your children”emphasizes Christophe Vourlat.
Write your beneficiary clause well
The traditional family now coexists with other models, including that of the blended family, which represents 9% of French families. 40% of them have more than three children. It is therefore more essential than ever to properly draft the beneficiary clause of your life insurance contract. Indeed, it is the family situation at the time of death that will be taken into account to pay the capital of the contract. It is then important to study the current situation of the family and to check that the consequences of the subscriber’s death are in line with the objectives of each to preserve their spouse/pacs partner/partner and their children. “Life insurance is a privileged tool to protect your life partner”, confirms Christophe Vourlat. And the latter to remember “that a PACS partner is not an heir and that he will only benefit from the exemption from inheritance tax provided for by law since 2007 if he is granted a share of his inheritance. It is therefore essential to choose the beneficiaries carefully, as well as the shares that will be allocated to them.. Carefully drafting the beneficiary clause will allow them to claim the policyholder’s life insurance after his death. According to Christophe Vourlat, “unless it is necessary to formulate a nominative beneficiary clause, it is often preferable to use an indirect beneficiary clause (beneficiaries designated by their quality – for example: “my children…”). Our substitutive clause is worded as such. The beneficiary clause in the dismemberment of property is to be handled with care because it does not only have advantages and it is sometimes a source of conflict”points out Christophe Vourlat, who continues: “Legal experts are available to provide advice. »
Sums exempt from inheritance tax
Life insurance contracts do not enter, in the civil sense of the term, into the estate of the deceased person. They benefit from a specific legal and fiscal framework. If the contract was funded before the subscriber turned 70, it can be passed on to the desired people, without any taxation, for an amount of €152,500 per beneficiary. Beyond this amount, the taxation may be lower than the inheritance tax. It is in fact limited to 20%, within the limit of €700,000, then to 31.25% above €852,500 per beneficiary, regardless of the family relationship with the insured (inheritance tax direct line can go up to 45%). For premiums paid after age 70, the benefits are more limited. The allowance is then reduced to €30,500 on the premiums paid. Beyond this ceiling, inheritance tax applies.