The Minister's response to Senator Malhuret of 22 September 2016 provides us with an opportunity to reiterate the importance of a careful wording of clauses that designate beneficiaries in life insurance policies in the event of death and of not simply adopting a standard clause such as "My spouse ... failing whom my children ... failing whom my heirs..."
It confirms the tax neutrality of clauses that provide "options" to allow the first-ranking beneficiary (for example, a spouse) to choose among a number of options (for example 100%, 75% or 50% of the insured capital), the balance being allocated to the second-ranking beneficiaries.
The Minister indicates in his response that inheritance duties are due in accordance with the degree of kinship that exists between a donee beneficiary and the insured, "regardless of the beneficiary's ranking if, in the event of a total or partial waiver by the first-ranking beneficiary, the life insurance contract provides for one or more successive beneficiaries". The administrative authority therefore accepts that the capital goes directly to the second-ranking beneficiary without transiting through the assets of the first-ranking beneficiary, and therefore with no indirect donation between the first and second-ranking beneficiaries which could give rise to taxation.
This means that the beneficiary clause must be drafted attentively to provide a number of options in accordance with the foreseeable needs of the insured's family and close ones, which may be expressed as fractions of the insured capital either for full ownership or divided into usufruct/bare ownership.
In life insurance matters, remember to use option-based clauses to allow the first-ranking beneficiary to make a choice in accordance with his requirements and those of successive beneficiaries.