If you’re hesitant about buying life insurance, the huge benefit for your grandchildren can help you decide. Indeed, it is possible for you to gratify them by taking out a contract in their name. But what is life insurance? How does this type of contract work?
According to the official website of the French administration, subscribing to a life insurance contract commits you to paying regular contributions. These then constitute your savings. “The insurer must make your money grow in order to be able to pay a capital or an annuity to the beneficiary (you or another person)”, specifies the site. Your interests then vary depending on the type of “medium used to grow the savings: euros, units of account or multi-media”, adds the government. It is possible for you to benefit from this money before the end of your contract. But then, what are the advantages of this life insurance? What’s the point of passing it on to your grandchildren?
In the case of an estate, your life insurance contract takes on its full importance. Indeed, the beneficiaries could have interesting tax advantages depending on the age at which the subscriber signed his contract. Indeed, on the death of the insured, a tax charge is applied. Nevertheless, the designated beneficiary of the contract benefits from a tax deduction. This allowance also depends on the age at which the subscriber started to contribute.
“No inheritance tax to be paid to the tax authorities up to 152,500 euros transmitted”, specifies Capital. Indeed, if you choose one of your grandchildren as the beneficiary of a life insurance contract, you can pass on to him, upon your death, up to 152,500 euros without him having to pay any tax. . Another interesting advantage of this contract: the accumulated capital is not legally part of the inheritance. This means that he is not subject to the respect of the hereditary reserve of the children. But if you want to benefit your grandchildren before death, another solution is possible.
If you want your grandchildren to benefit from your life insurance when they reach majority, you can take out a contract in their name before they turn 18. You can then defer the payment whenever you want. But for this solution, it is necessary to make a donation of money accompanied by an assistant pact.
When you want to make a donation with an assistant pact, you choose a contract in which the money will be placed. You must then make a manual gift of money to your grandchild. It will then be necessary to attach a written pact “in which will be inserted a clause which will force the beneficiary to invest the sums given in life insurance”, specifies Capital. This donation will then be subject to a tax deduction of 31,856 euros. However, this amount can only be collected when he turns 18. By adding an inalienability clause to your contract, you can determine the age at which your loved one will receive the capital.
But for an assistant pact associated with a manual gift, it is necessary to take your precautions and prepare the contract well.
To be sure to have all the keys in hand when subscribing to the life insurance contract, it is necessary to check a few things. When you sign up for this offer, put it directly in your grandchild’s name and add the amount you wish to give. Once you have created it, declare your donation to the tax authorities. This action allows you to benefit from the reduction once again after fifteen years.
When requesting a cash advance or redemption, your consent will also be required up to the age at which your grandchild will benefit from it. Must be between 18 and 25 years old. Finally, if your loved one dies before the age, you will be able to recover the money from this account. A clause guarantees it.
The gift with an assistant pact can therefore be the best way to benefit your grandchildren even before the succession.