Life insurance: how to write the benefit clause?

The benefit clause is of paramount importance as it includes the names of the persons who, on your death, receive the savings from your non-succession life insurance under very advantageous tax conditions. Hence the need to reread it regularly and update it according to the transmission projects that may change.

Give more to one child than another

The standard beneficiary clauses of most life insurance contracts state that death capital benefits “My spouse not separated from the body, failing which my children, born or unborn, living or represented, in equal parts, failing my heirs”. This wording, which has the merit of correspondence to a number of situations, does not allow to gratify one child more than the others, while ensuring respect for the hereditary reserve of each.

To do this, you must indicate the proportions that you want to convey respectively to each of your children (while specifying their name, first name, date and place of birth): “50% to Aline, 30% to Philippe and 20% to Pierre” , e.g. This procedure can be declined in favor of the other beneficiaries, such as siblings, nephews and nieces, friends …

Our advice

Percentages are always better than amounts. Indeed, if there is not enough money because part of the savings has been consumed in the meantime, „The insurer will not be able to honor the benefit clause and will have to move to the next rank which usually indicates„ failing my heirs ”. He shall then transfer the capital to the notary in charge of the succession, so that the latter shall proceed to the same division as for the succession. ‘warns Sophie Nouy, ​​director of the heritage expertise at Cyrus Conseil.

Another method: establish a contract for each child or each beneficiary. This strategy requires a minimum of anticipation. Because, to optimize the existing deduction on the transferred capital (save plus interest) of 152,500 euros per beneficiary (ie children or other persons, excluding spouse or partner of pacs who are, they, totally exempt from inheritance tax), premiums must have been paid into the contract before your seventieth birthday.

Predict a two-generation transmission

With the increase in life expectancy, it is not uncommon for children to inherit after the age of 50, or even after the age of 60. If they have already built their wealth themselves, they may be tempted to give up a life insurance policy for their own children. The standard benefit clauses provide for transmission to “children, born or unborn, living or representing”. But contrary to what one might think, this form does not allow first-time beneficiaries (your children) to give up death capital in favor of second-degree beneficiaries (your grandchildren).

Representation only works here in the event of the death of the first beneficiaries. To reward their own children, the top beneficiaries have no choice but to accept the capital and then redistribute it in the form of donations, forcing them to consume the existing tax rebate of € 100,000 per parent and child, every fifteen years.

Our advice

The possibility of being able to waive death capital must be explicitly provided for “So that the insurer can immediately understand under what conditions and to whom it will pay the funds”, explains Sophie Nouy. It can be defamed as a costume: “My children born or to be born, living or represented, in case of renunciation by one of them, his share of the death capital will be passed on to his children, in equal shares, failing which my heirs. »

Means of amending the benefit clause

The recommended letter is a simple and secure solution to change the wording of the beneficiary clause. But other means can also be used: sending the insurer a form that can be downloaded online (in its secure space) or inserting it in a will (its existence must be indicated in the beneficiary clause of the contract). This last formula has the advantage of providing absolute confidentiality and a global approach, applicable at the same time to all contracts signed and without a contract by contract. It also makes it possible to distribute your savings in a highly personalized and safe manner, with the notary in charge, in particular in compliance with the available quota (the share of the assets that is freely available) and the hereditary reserve.

Offer the spouse the opportunity to deduct only part of the capital

With a standard clause, the beneficiary spouse has two options: either accept the entire death capital of the contract, or repay it in full. In other words, he can’t just get what he really needs in terms of his age, his own income, and his wealth, so that children receive the fraction of unaccepted capital.

How to remedy this situation? In adopting a so-called “drawer” clause indicating “my spouse not separated from the body or in the process of divorce for the whole, three-quarters, half or one-quarter of the death capital, to my children children, born or to be born, living or representing, in equal parts, failing that my heirs ”. When it comes to estate tax, everyone wins. The spouse is totally exempt from inheritance tax, regardless of the amounts transferred to him, the dates of opening the contract and those of the payments.

For their part, each child may be required to pay if the capital received exceeds the deductions in force: 152,500 euros for the money saved before the age of 70 and, for all beneficiaries, 30,500 euros for the money saved after the age of 70. years.

Our advice

Writing a drawer clause involves using a notary because “One cannot make an in-depth analysis of every family situation. All that is needed is to personalize this clause, especially to allow it to be fully operational when it is.explains Arlette Darmon, associate notary of the Monassier group. It is essential, for example, to provide for a maximum period of time for the exercise of the spouse’s right of option, because it does not entail and does not block any transfer of capital to children. “.

A site for potential beneficiaries

For a variety of reasons (still young children, disagreements between potential heirs, etc.), it can be auspicious not to disclose the existence of a life insurance policy. But, to prevent it from falling into oblivion (we then speak of disinheritance), insurers have, among other things, the obligation to look for beneficiaries by all means. For their part, those who assume that they are the beneficiaries of such a contract have the option of seizing Agira online, enclosing a copy of the death certificate of the prospective subscriber (Formulaireassvie.agira.asso.fr). This structure brings together all the insurance companies operating in France. This request, simple and free, is processed within fifteen days. Insurers have one month to inform only beneficiaries, if any.

Favor your spouse without hurting your children

With a standard clause, the death benefit benefits either the surviving spouse alone (“my non-separated spouse, failing which my children …”) or, at the same time, the surviving spouse and the children in proportions set out in preliminary (“My spouse not separated from the body to the extent of 50% of the death capital and my children, Aline and Philippe, living or represented, in equal shares, failing which my heirs …”). In other words, it is not possible to successively and non-jointly gratify different beneficiaries, except to dismember the beneficiary clause by designating the spouse “usufructuary” of the death capital and the children “bare-owners”.

This technique allows you to lower your tax rate a little when your capital is very important. In particular, it provides protection for the spouse, since he will have the use of all the death capital before it is, in a second stage, at the end of the usufruct, transmitted to the children. It can also be used in favor of a usufructuary child and naked-grandchildren.

Our advice

Becoming a beneficiary clause requires a multitude of precautions. It is thus necessary to rule out any risk of disappearance of death capital – which legally constitutes what is called a consumable property – by providing security for the benefit of bare owners: mortgage guarantee on an existing real estate or so-called “re-use” clause forcing the usufructuary to invest the death capital in a building within a certain time frame, for example. It is also important to avoid taxing capital transfers to bare owners. Pour that, “The usufructuary’s claim must be opposable to the tax administration, which involves the drafting of a notarial deed”recall Arlette Darmon.

Beware of the first exaggerated manifestations

The sums paid under a life insurance policy enjoy a great exception. They do not fall within the assets of the subscriber. However, he cannot do anything – such as payments on the eve of his death or very significant payments in relation to his estate and / or income – to maintain the hereditary reserve, which represents the share of his estate that must necessarily benefit his descendants (children, grandchildren …). If that were the case, they would be justified in asking the judge to reimburse these “manifestly exaggerated premiums” in the estate.

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