Estate Planning with Life Insurance
Many have discovered life insurance as an alternative way of saving. And life insurance policies are tax efficient: there is an insurance premium tax of 2% of the invested funds, but then the policy can be used to invest tax free.
We distinguish savings policies (branch 21) that are only exempt if taken out for more than 8 years, and investment policies (branch 23, or “insurance wrappers” that are invested in funds that may go up or down.
However, when they pay out upon death, inheritance tax is due. That may not be a problem for the investors, but if they want to save their heirs a lot of inheritance tax, the techniques we will explain can be very efficient.
Gifting policies, reappointing beneficiaries, “joint life second death” policies, … are but a few.
Paying some gift tax to avoid inheritance tax later can reduce the tax bill.