In any life insurance contract, it is possible to designate your spouse or children as beneficiaries in the event of death in a dedicated clause. Clause that it may be interesting to split.

Life insurance is not only a financial investment, it is also a first choice asset tool when it comes to the transmission of financial capital, because the beneficiary is intended to receive sums of money after the death of the member. This insurance is therefore often recommended for people wishing to protect their loved ones in the event of disappearance and to prepare their inheritance.

As its name suggests, it is in the beneficiary clause that the subscriber of the life insurance contract designates the persons who will benefit from the capital in the event of death. It may be, for example, "his born children (whether they are) represented or not, his unborn children", his heirs, and/or his spouse. But it is also possible to dismember this beneficiary clause and to name two distinct types of beneficiaries for the same contract. Full ownership is thus split into two sub-categories: usufruct and bare ownership. The usufructuary has the power to enjoy the property directly or to derive income from it, and the bare owner, on the other hand, will benefit from full ownership at the end of the usufruct which will grant him full disposal of the property.

In detail, all the premiums paid as well as the fruits of this capital return, from the death of the insured, to the usufructuary (or quasi-usufructuary since it is money) and this until on his own disappearance or for a given time, fixed in advance. Thus, at the end of the usufruct, the bare owner(s) must be reimbursed the full value of the capital. Such a device implies that the quasi-usufructuary has, in theory, the freedom to spend the money of the contract. However, the sums spent will constitute a debt towards the bare owner, which will be imputed during the succession of the quasi-usufructuary. The risk being, of course, that in the event of squandering of the capital by the quasi-usufructuary, his estate assets will not be sufficient to cover the entire debt.

Several tax rules come into play depending on the date of subscription of the contract, the date of payment of the premiums and the age of the insured on the date of payment of the premiums. Let's take the most probable case of a subscriber having paid his premiums from October 13, 1998, before he turned 70 and on a contract taken out from November 20, 1991. In this case, the sums paid are within the scope of the deduction provided for in article 990 I of the general tax code. This article specifies that in the event of the dismemberment of the beneficiary clause, the bare owner and the usufructuary are considered as beneficiaries on a pro rata basis of the share due to them in the benefit of the sums paid in application of the life insurance contract, determined according to the age of the usufructuary (in application of the scale provided for in Article 669 of the General Tax Code). Also, both share the allowance of €152,500 according to the same pro rata. Note that if the usufructuary is the surviving spouse or PACS partner, he is exempt from the levy. It follows that it is appropriate to apply as many reductions as there are "usufructuary/bare owner" couples.

Finally, the interest of the dismemberment of the beneficiary clause is multiple. First of all, it allows the subscriber to protect his spouse while passing on part of his assets to his children. Most people who opt for this option choose to designate their spouse as usufructuary and their children as bare owners. You should know that even couples who are not married or in a civil partnership can carry out this operation, which is therefore an excellent way to protect your companion in the event of death. Another alternative is to pass on part of his capital to his children, who are then designated as usufructuaries, and his grandchildren, the bare owners.

This dismemberment of the beneficiary clause thus adapts to the current problems of intergenerational transmissions, but the drafting of the clause can prove to be complex: it is indeed advisable to be accompanied by a professional.Find out more