According to a study by the German Institute for Economic Research, an estimated 200 - 400 billion euros are inherited or handed over early in Germany every year.
Even if it is not pleasant to deal with one’s estate and thus also with death, it is advisable to plan the succession of assets in good time. Private placement life insurance is a a perfect tool to do so. The special feature is that the beneficiary clause is a contractual agreement in the form of a life insurance contract. The tailor-made arrangement with the direct transfer of assets to named beneficiaries has the great advantage that there are no delays in the event of death. This is because no certificate of inheritance is necessary, and furthermore fiscal charges can be optimised and assets passed on in a targeted manner.
The following example shows how Private Placement Life works.
An entrepreneur, German citizen and resident in Germany, is 63 years old. His two grown-up sons also work in the family business. The entrepreneur has an eleven-year-old daughter from his second marriage. He has settled the inheritance of his sons. Now he wants to make his daughter a beneficiary as well. For this purpose he takes out a life insurance policy.
He names his daughter as the beneficiary in the event of death and determines a fixed payment date (e.g. age 25 of the daughter) at which she can receive the amount intended for her at the earliest. The father retains all rights to his policy throughout his life and is not taxed on the income during the term of the policy. He can change the beneficiaries at any time if necessary. If this does not happen, the daughter also receives the money income tax-free after his death and at the earliest when the maturity date occurs.
If you are interested in information on this or any other succession planning solution, we look forward to hearing from you. Our experts will be happy to advise you and work with you to find a solution tailored to your individual needs.