What hypotheses are considered here?
Julien Milinkiewicz: We know all the importance of the beneficiary clause in life insurance: according to the rules of the stipulation for someone else’s account, the death benefit is paid on the death of the insured to one or several specific beneficiaries. As a reminder, from the civil point of view, the capital is transmitted “outside the inheritance”, it is not subject to return or reduction for non-compliance with the hereditary reserve; except in the case of manifestly exaggerated premiums. From a fiscal point of view, the capital is subject to an advantageous tax regime. Therefore, it is essential that any ambiguity in the identification of the beneficiaries be removed at the end of the contract.
But we also know that wealthy clients are increasingly mobile internationally: a client with assets of +10 million euros will change jurisdiction 3 times on average during his life.
Both the subscriber and the beneficiary can transfer after drafting a beneficiary clause. For example, a Frenchman with life insurance who is going to settle in Belgium and dies there while his beneficiary children remain domiciled in France; or a French subscriber whose children, beneficiaries, go to the United States to study and work there.
Therefore, the beneficiary clause will have to be adapted, this is also the portability of the open insurance contract in Luxembourg.
For example, what precaution should be taken when drafting the beneficiary clause?
Julien Milinkiewicz: In an international context, pay attention to the clause that designates “my heirs: the term heir is a notion of succession law, the heir is designated by the law applicable to the succession. If the subscriber leaves France and dies in a foreign State, the law applicable to the succession may be the law of that State and not French law.
Example: the policyholder has designated “his heirs” as beneficiaries, then he moves to Morocco where he dies. By application of Moroccan inheritance law, if it is applicable to the succession, the heirs will be the son and the daughter. But the latter will only inherit a third, her brother the remaining two thirds.
Therefore, the subscriber’s intentions are frustrated by the non-adaptation of the clause during the relocation. In our case, it will suffice to designate before departure “my heirs as defined in the application of French inheritance law. »
And at the level of taxation for the death of the insured?
Julien Milinkiewicz: Care must be taken when moving to a country that has signed a tax treaty on inheritance: the specific taxation of insurance provided for in article 990 I of the CGI is never dealt with in the Conventions. Therefore, there may be a risk of double taxation if the deceased’s country provides for inheritance tax.
Example: the subscriber of a life insurance contract for the benefit of his children who live in France goes to settle in Belgium and dies there several years later. Since the succession is opened in Belgium by application of the Convention (place of residence of the deceased), the death benefit will be taxable there but the Convention does not cover taxation of life insurance, the beneficiaries will be taxed a second time in France at 990 I CGI art title.
Our solution: modify the clause designating “the heirs” to exclude the sui generis tax and thus be taxable only in Belgium.
Source: BFM TV
