Can you designate a good cause as a beneficiary in a life insurance policy?
More and more people wish to leave part of their estate to a good cause. This can be done by means of a double bequest and a will, but also through life insurance. We will explain how.
If you invest in life insurance (branch 21 or 23), you must always designate a beneficiary in case you die before the final maturity of the policy. If you wish to support a good cause (there is also a list of recognised charities on www.testament.be), you simply need to designate the good cause as the beneficiary in the event of death in your policy. However, the charity will also have to pay inheritance tax on the amount you leave. Non-profit organisations may, under certain conditions, benefit from reduced inheritance tax. It is nevertheless recommended that you contact the chosen charity beforehand. Depending on the charity involved, they must keep a minimum net amount before they agree to this.
Of course, there is nothing to stop you from designating several beneficiaries. This way, you can leave part of the policy to a good cause and the rest, for example, to your children. This is the perfect solution for your estate planning and asset transfer.
However, you should know that you cannot disinherit the rightful heirs, i.e. your spouse and children. They are always entitled to part of the inheritance.
Bear in mind that if you choose a good cause as a beneficiary, this may result in the loss of certain tax benefits (for branch 21 or 23 policies).
An important advantage is that you can always change the beneficiary. You will therefore always be in control. Please note that this does not apply in the case of an accepting beneficiary.
The main target audience for dual bequests is single people, whose potential heirs or beneficiaries are so distant (in rank and order) that inheritance taxes are very high. Thanks to a dual bequest, an advantageous arrangement is still possible.
By reading this article, you will learn more about branch 23 insurance offered by NN and how to prepare your transfer of assets thanks to the proposed solutions.