How does life insurance work within the succession?

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How does life insurance work within the succession?

October 16, 2022 Insurance 0
Hjalmar Jesus Gibelli Gomez How does life insurance work within the succession

When a person takes out life insurance, they do so for multiple reasons: to take care of their life and that of their family, and to have financial support that gives them peace of mind at the time of death.

This capital is not always a profit, since the beneficiary in the life insurance will have to declare inheritance taxes according to the money received.

In this sense, there are three cases where this tax can be applied:

  • You receive an inheritance upon death.
  • If you are a life insurance beneficiary.
  • Because you receive goods by donation in life.

How is life insurance taxed?

Hjalmar Jesus Gibelli Gomez How does life insurance work within the succession. 1024x683 - How does life insurance work within the succession?

In inheritance and gift tax, two cases can occur with the capital collected from life insurance. If the person who collects is the beneficiary of the insurance, he will have to pay inheritance tax. And if the person who collects is the insurance holder because he receives the survival insurance benefit, he is taxed in the form of donations.

Partial settlement of inheritance tax

It may happen that at the time the compensation for the death of the insured is received, the beneficiaries do not have the necessary liquidity to face the inheritance tax. What needs to be done is to carry out a partial settlement of this tax because the law allows a document to be submitted where this question is requested.

 

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