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“Finance law: Beneficiary clause”
The beneficiary clause of a life insurance contract designates the beneficiary of the contract in the event of the death of the holder. How to properly draft the beneficiary clause.
Designation of beneficiary
The beneficiary of a life insurance contract must first be clearly identifiable. In the absence of designation or in case of ambiguity, the sums invested are reintegrated into the estate.
If the beneficiary dies before the insured, the clause may lapse: the sums will not go to the beneficiary's heirs after the death of the insured.
Example: Mr. Martin designates his son Jean as beneficiary. Jean dies. Mr. Martin will have to review his beneficiary clause if he wants the savings to be paid, on his death, to his grandchildren.
Care must therefore be taken in the designation of the beneficiary.
Name of beneficiary
First precaution to take: avoid designating the beneficiary by name. You have to write, as insurers suggest, “my spouse” and not “Mrs. Martin, my wife”. In the event of a subsequent divorce, the ex-spouse will not be able to claim the contract since the quality of beneficiary is assessed on the death of the insured. It is therefore the title wife who will receive the sums paid.
Second precaution: always plan for second-tier beneficiaries: “my spouse, or failing that, my children, born or to be born”. If Mr. Martin divorces without remarrying, his children will benefit. In the same vein, it is also necessary to provide for the “predeceased” of the beneficiary and to mention “my living children born or to be born and my children represented”. If one of the children dies before Mr. Martin, his own children will be able to collect part of the contract: they will come in “representation” of their predeceased parent.
Appointment to the notary
The ideal is to mention that the beneficiary is designated in a deed filed with Me Dupont, notary. Obliged to professional secrecy, the notary cannot reveal the name before the death of the insured. And he can change beneficiaries as he sees fit.
Another advantage: the notary, notified of the death, will do the necessary with the insurer. What is sometimes forgotten by the heirs.
Important clarification: Insurance companies must search for the beneficiaries of the contracts after the death of the subscriber, the sums bearing interest one year after the death. cf. life insurance and beneficiary research.
Dismembered beneficiary clause
The contract holder may also provide for the dismemberment of the beneficiary clause. The proceeds of the contract will be shared between a usufructuary and a bare owner. See the dismemberment of the beneficiary clause.
Acceptance of the beneficiary clause
The beneficiary can “accept” the contract.
Before December 19, 2007, it was sufficient to send a simple registered letter with acknowledgment of receipt to the company to accept the benefit of the contract. Since this date, acceptance must be materialized by an amendment to the contract signed by the three parties (insured-holder, beneficiary and insurer) or by a document signed by the insured and the beneficiary and sent to the insurer. This new device thus prevents the insured from being faced with a fait accompli.
The consequences of acceptance are indeed important. In case of acceptance by the beneficiary, the contract holder can no longer modify this clause, nor carry out a total or partial surrender without the beneficiary's agreement.
An enormous constraint for the insured, which could be imposed on him for acceptances served before December 19, 2007. A judgment of the Court of Cassation of February 22, 2008 considerably alleviated this constraint by affirming that the holder of a contract of life insurance accepted by the beneficiary before December 18, 2007 could still proceed with redemptions without the agreement of this beneficiary.
Choices and consequences
This is the spouse of the holder at the time of death. And therefore the new spouse in the event of remarriage.
My children born or to be born
My children alive or represented
When a child has died before his own children, the latter come “in representation”. That is to say, the deceased is “represented” by his children. This mention will allow the children concerned to receive the share of the life insurance contract that should have gone to their previous father or mother.
These are the heirs provided for by law and the legatees designated by the will drawn up by the deceased.
The designation of the cohabiting partner in the beneficiary clause can easily be disputed when the contract does not expressly mention the identity of the beneficiary. In this situation, it is up to the alleged beneficiary to establish his quality of cohabiting partner on the day of death, by proving in particular the existence of a common life: same income statement, mention of the two names on the rental lease or the invoices energy, etc.
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