Life insurance is an excellent savings tool offered by a third-party insurer. In return for the premiums, the insurer makes a commitment to pay an annuity or a capital sum to the person insured when the contract is signed. The insured can freely designate the beneficiaries of the contract. A flexible and advantageous tax system allows for the transmission of assets. What happens to the life insurance in case of the death of the beneficiary?
The beneficiary clause of the contract reserves the rights of his heirs
A lawyer can accompany you to defend your interests in the event of the death of a life insurance beneficiary. This is the case if the beneficiary of the contract has previously accepted the contract. Indeed, it is a given that the death benefit becomes payable from the day the beneficiary survives the insured. Moreover, this eligibility constitutes the character of a claim that has come to the beneficiary’s term and whose execution of the payment is forced.
It should be noted that the death benefit, given its payable nature, enters the beneficiary’s estate on the day of the insured’s death. This is facilitated by the beneficiary’s acceptance of the stipulation during his or her lifetime and by the death request to the insurer, which may not be relevant in this case. The death benefit attributed to the beneficiary is, therefore, part of the estate and must be submitted to the estate manager who pays the funds to the heirs.
Transmission of unpaid capital to the Caisse de dépôt et consignations
The life insurance contract’s singing is accompanied by the choice of the beneficiary or beneficiaries. These beneficiaries, for one reason or another, may be unreachable. Since the life insurance is dedicated to these beneficiaries after the death of the insured, the insurer has the firm responsibility to search for them.
However, despite the efforts to search for them, no result is found. That is to say, if the insurer does not manage to identify or contact the beneficiary or beneficiaries of this life insurance, it is called to be patient. If, after approximately 10 years from the knowledge of the insured’s death, no success has been achieved, the ideal solution is to transfer the unpaid capital to the Caisse des Dépôts et Consignations. The latter waits for a new period of up to 20 years before transferring the death benefit to the State. These irrecoverable funds will be used to feed the reserve funds for pensions.
Life insurance is exposed to inheritance tax premiums.
Upon the death of the beneficiary of a life insurance policy, it is important to note that the premiums received on the contract are not exempt from inheritance tax. Nevertheless, they may be subject to inheritance tax. These rights are subject to inheritance tax on premiums paid after the age of 70 and may be equivalent to one thousand euros. In order to make an effective assessment of this threshold, it is preferable to take into account all the contracts taken out on the insured’s account.
Furthermore, if the premiums are not subject to inheritance tax, they may be subject to a 20% levy on the beneficiary’s share. Note that the beneficiary assesses the deduction for all the contracts taken out on the life of the same insured. Apart from that, the 20% deduction made by a financial institution is not due if the tax residence of the subscriber is outside France, for example, at the time of subscription.
It is, therefore, worth noting that life insurance enjoys a privileged tax status, with the difference that it is relatively complex, as the regulations may differ according to the age of the subscriber at the time of the payments and other criteria.
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