With nearly €9 trillion set to be passed down from one generation to the next by 2040, and with household wealth largely consisting of real estate, the issue of inheritance is becoming increasingly important. While owning property allows you to build up a lasting and tangible asset base, it also poses a major challenge when it comes to inheritance: the payment of inheritance tax. This can be high, and there may not always be sufficient cash available to cover it. Death insurance therefore appears to be a strategic tool for securing inheritance and preserving family assets.

Significant assets but little or no cash

Many property owners find themselves in a paradoxical situation: they have substantial real estate assets but little or no available cash. However, when someone dies, their heirs must pay inheritance tax within a relatively short period of time (usually six months). If they do not have sufficient cash, they may be forced to sell a property urgently, sometimes on unfavourable terms, simply to meet this tax liability. This problem is all the more significant when the assets consist of family property that has sentimental value in addition to its market value!

Liquidity at the right time

Death insurance provides a precise solution to this problem. The principle is simple: in return for the payment of premiums, the insurer pays a predefined sum to the designated beneficiaries in the event of the insured person's death. As with funds held in life insurance policies, the capital is available immediately and can be used freely by the beneficiaries. With a view to inheritance, this lump sum can be used to pay inheritance tax.

A solution to be integrated into an overall wealth management strategy

The choice of the insured amount and the beneficiary or beneficiaries must be consistent with the composition of the estate, the applicable tax regime and the inheritance objectives. A detailed analysis is essential in order to adjust the guaranteed lump sum to the estimated amount of inheritance tax and changes in the estate, particularly the financial estate.

In a constantly changing tax and legal environment, professional support enables you to integrate death and life insurance into an overall strategy, which may include advance planning for inheritance. Finankap's wealth management advisers carry out an estate review, identify areas for attention and help you implement solutions tailored to your situation and objectives. Contact us!

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