How can I leave part of my savings to my family?
SAVINGS FOR MY FAMILY
If you’re someone who considers all the possible scenarios, who’s far-sighted, someone who likes to be prepared for unexpected events and not leave things to chance and wants to protect their loved ones, or if you’ve decided to start improving your habits, here’s how to leave your savings to your family, to be worry-free and make sure that whatever happens, your loved ones will be safe.
Savings can be used to help your family in the future and there are many ways to do it, whether you’re the holder of a pension scheme or you've chosen a life annuity. We’ll tell you how.
How can one inherit a pension scheme?
When you’re no longer there, your loved ones will be able to inherit your pension scheme because you can include two types of beneficiaries to be covered in the event of death.
- Specifically appointed: The holder specifies who is to inherit the pension scheme and determines the proportion, if necessary. The names on the will will also be valid.
- Not appointed: The regulations of the pension scheme may determine who the beneficiaries are (usually the legal inheritors, like children and spouse). In the event of inconsistencies between the beneficiaries of the pension scheme and the will, the document with the most recent date will be prevail over the other.
How can one inherit a life annuity?
The life annuity can be inherited in different ways: on the one hand, you can specify two holders and, in this case, the monthly annuity will be divided by half between them and paid for as long as either of them lives. Each holder will be subject to the appropriate tax withholding. On the other hand, you can appoint an inheritor in the policy. In this last case, there are two options: the entire capital sum is paid as a lump sum, usually a percentage of the funds deposited, or in the way of an annuity or percentage of it.
How does inheriting a pension scheme or life annuity affect my taxes?
Tax-wise, when a beneficiary inherits a pension scheme, the amount inherited must be included as earned income in the Income Tax Return. In other words, if you receive the savings as a lump sum, your taxable base may increase in such a way that you’ll have to apply the maximum tax rate, 45% (or even 48% depending on the region where you reside). In this case, no Inheritance and Donations Tax is paid for it.
If it’s received as a life annuity and one of the holders dies, the other holder will have to pay Inheritance and Donations Tax and will continue to receive the entire annuity without applying the withholding to the other half. Once all the holders have died –if the cover for death had been taken out–, the capital sum will be paid to the beneficiaries.