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Transferring the capital of a life insurance policy to a general interest organization is one way of supporting the association or foundation of your choice. However, be careful to write the beneficiary clause.

Bequeath your life insurance for the benefit of an association

Since the disappearance of the ISF in 2017, associations and foundations have seen a decrease in donations to their profit. According to the annual barometer of the generosity of the French published by, taxable persons on the tax on fixed assets (IFI) gave 112 million euros in 2018, against 270 million in 2017. Donations made by those subject to income tax also fell 1.8%.

Immediate donation is not the only solution to help a charity. Thelife insurance is a savings contract which makes it possible to transfer a capital to one or more beneficiaries of his choice at the time of his death. While it is common to appoint a loved one, individuals can also choose an association or a foundation as heir of capital incorporated on their contract. In this case, it is even possible to schedule the payment of the capital in a lump sum or in a staggered manner, for example as the needs of the organization evolve, or when it has fulfilled an objective.

To read: Donations to associations: supporting a cause always allows you to reduce your taxes

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What differences from a legume?

Passing on the capital of life insurance rather than carrying out a legacy has several advantages. On the one hand, the legacy must be established by will. If legally it is possible to write it alone on a free paper, it is preferable to call a notary to avoid any ambiguity or dispute on the beneficiary at the time of death. This generates costs and complicates any subsequent modifications. In life insurance, the choice of beneficiary is recorded in writing by the insurance company, and easily editable at any time.

The advantage of transmitting a life insurance contract is also tax. Deposited capital escapes indeed the classic rules of succession. This system allows for example to get rid of the hereditary reserve (that is to say to make a donation which goes beyond the share legally reserved for children), if the sums presented on the contract are manifestly not exaggerated by relative to the amount of the estate of the deceased. This character is assessed at the time of payment and not on the death of the insured.

From a tax point of view, the transmission of the capital of a life insurance is, like legacies, exempt from inheritance tax when the association is recognized as being in the public interest and falls within the scope of article 795 of the General Tax Code. If not, life insurance has a more favorable plan. Premiums paid before age 70 are not subject to transfer taxes, and those paid after this age are also exempt up to a limit of 30,500 euros. In all other cases, the amounts transmitted are taxed up to 60% after a deduction of 1,594 euros.

Read: Coronavirus: what tax for donations made by companies?

Be careful to indicate the association in the beneficiary clause

If the procedure for designating an association or foundation as the beneficiary of life insurance is simple, drafting the beneficiary clause in a precise manner is very important. The case law is rich with examples of disputes that have been brought before the courts for difficulties of interpretation.

An article on the site of the Arc Foundation for Cancer Research perfectly describes the details that must be mentioned in order to remove doubts, whether the subscriber has chosen one or more beneficiaries. He specifies in particular that it is necessary to be as exhaustive as possible, by writing the name and the registered office of the organization.

Please note, not all associations can receive funds directly. Those which are authorized there are the cultural associations, those whose object is to support the assistance to the people, the scientific or medical research and those recognized of public utility before the death of the subscriber. Since 2014, other works and organizations concerned in particular with education, humanitarian aid or artistic heritage are also concerned. All categories are defined in article 200 – 1 – b of the General Tax Code.

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