{"id":14825,"date":"2018-01-17T13:00:01","date_gmt":"2018-01-17T12:00:01","guid":{"rendered":"https:\/\/pibgroupiberia.com\/?p=5216"},"modified":"2025-12-16T11:18:06","modified_gmt":"2025-12-16T10:18:06","slug":"life-insurance-as-a-form-of-inheritance-tax-relief","status":"publish","type":"post","link":"https:\/\/pibgroupiberia.com\/en\/blog\/el-seguro-de-vida-como-forma-de-sufragar-el-impuesto-de-sucesiones\/","title":{"rendered":"Life insurance as a way of paying inheritance tax"},"content":{"rendered":"<p>The <em><strong>Inheritance and Gift Tax (ISD)<\/strong><\/em> is a tax levied on <strong>inheritance and gifts<\/strong>, The beneficiaries of these are taxed. We will see how life insurance is becoming widespread as a mechanism for paying this tax.<\/p>\n<h2>Inheritance tax in Spain<\/h2>\n<p>The <em>ISD<\/em> is delegated to the Autonomous Communities, so it is not the same throughout Spain as VAT, for example. This fact means that there are large differences between regions when it comes to its liquidation, which is a clear social injustice.<br \/>\n<strong>Aragon<\/strong>, the region where we are geographically located, is one of the Communities where this tax is the most burdensome. Although other regions have multiple exemptions (some are even in the process of eliminating it, such as Andalusia), Aragon has confirmed that it will maintain it under similar conditions for 2018.<\/p>\n<p>As we say:<\/p>\n<ul>\n<li>in some Autonomous Regions, such as: Madrid, Cantabria or La Rioja, <strong>on <em>ISD<\/em> is almost entirely exempt,<\/strong>\u00a0<strong>in other<\/strong><\/li>\n<li>according to the degree of kinship, age or pre-existing assets of the heir, <strong>more than 20% could be paid. <\/strong>of the value of the inheritance or gift, in taxes.<\/li>\n<\/ul>\n<p>This means that in the most extreme cases the heirs may be forced to renounce the inheritance, which is rightfully theirs.<\/p>\n<p>This <strong>graphic<\/strong> is more than enlightening (source, <em>La Voz de Galicia<\/em>):<\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-3624\" src=\"\/wp-content\/uploads\/2017\/03\/impuesto-sucesiones-seguro-vida.jpg\" alt=\"Inheritance tax amount chart\" width=\"950\" height=\"564\" \/><\/p>\n<h2>Financial liquidity through life insurance<\/h2>\n<p>We discussed how life insurance can be of benefit in the event of an inheritance. The reasons for this are precisely the following: an inheritance in which there is no liquidity to pay the tax may lead to<\/p>\n<ol>\n<li>Having to <strong>to dispose of assets quickly<\/strong> and, above all, below their real value, in order to be able to inherit<\/li>\n<li>Even having to <strong>renouncing an inheritance<\/strong> for not being able to pay the taxes generated by it.<\/li>\n<\/ol>\n<p>What this life insurance policy achieves is that the people who appear as beneficiaries of the insured capital can:<\/p>\n<ul>\n<li><strong>Quickly perceive <\/strong>the amount of life insurance<\/li>\n<li><strong>Partial\u201c settlement\u201d<\/strong> Inheritance Tax (only for the part corresponding to the capital received for the insurance)<\/li>\n<\/ul>\n<p>In this way,<\/p>\n<blockquote><p>with the money received from the insurance, <strong>we will be able to take sufficient cash into account <\/strong>in order to be able to pay the rest of the tax.<\/p><\/blockquote>\n<h2>Example of a life insurance claim to pay off an inheritance<\/h2>\n<p>Yes <strong>we inherited 1 million euros<\/strong> between main home, perhaps secondary home and cash and savings. We may have to pay up to \u20ac200,000 in order to inherit. If the deceased had a <strong>life insurance<\/strong> of, say, <strong>150.000 \u20ac<\/strong>, the operation would be:<\/p>\n<ol>\n<li>Inherit the \u20ac150,000 from the life insurance first, and be taxed (let's say also upwards) on a 20%. We would receive, in this case, \u20ac120,000.<\/li>\n<li>With this, and some savings or even a smaller loan, we could easily pay the \u20ac200,000 in taxes.<\/li>\n<\/ol>\n<p>As we can see, the role of the life insurance policy in these cases becomes crucial, as seeking financing of \u20ac200,000 or more may not be easy depending on our circumstances.<\/p>\n<p>But that is not all. What many people don't realise is that the insurance company itself is legally responsible for the <strong>ability to make an advance payment of this amount <\/strong>necessary to make the partial settlement of the tax, so that the beneficiary of the insurance would not have to bear any loss of his available economic capacity at that time.<\/p>\n<p>If you are interested in further information, please do not hesitate to contact us. PIB Group Iberia works with <a href=\"\/en\/blog\/the-importance-of-a-life-insurance-policy-that-really-delivers\/\">Specialist life insurance companies<\/a>, The best conditions on the market and, above all, the most important, which have the <strong>solvency<\/strong> necessary so that, when we need to draw on the life insurance money, the payment is made as quickly as possible for the reasons we have seen.<\/p>\n<p>If you want to quote your policy with our life insurance comparator, for you or your loved ones, you can choose from the best insurers in Spain.<\/p>","protected":false},"excerpt":{"rendered":"<p>Life insurance, in many cases, helps to cope with inheritance taxes.<\/p>","protected":false},"author":14,"featured_media":14826,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"yasr_overall_rating":0,"yasr_post_is_review":"","yasr_auto_insert_disabled":"","yasr_review_type":"","footnotes":""},"categories":[16,152],"tags":[165],"class_list":["post-14825","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-particulares","category-profesionales","tag-vida"],"yasr_visitor_votes":{"stars_attributes":{"read_only":false,"span_bottom":false},"number_of_votes":0,"sum_votes":0},"_links":{"self":[{"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/posts\/14825","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/comments?post=14825"}],"version-history":[{"count":0,"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/posts\/14825\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/media\/14826"}],"wp:attachment":[{"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/media?parent=14825"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/categories?post=14825"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pibgroupiberia.com\/en\/wp-json\/wp\/v2\/tags?post=14825"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}