The features of Liechtenstein life insurance
Liechtenstein life insurance offers a comprehensive and efficient wealth concept. It aims to enable long-term wealth accumulation, manage assets in a structured manner and ensure both estate planning and comprehensive asset protection.
The wealth concept from Liechtenstein combines the strengths of two areas: On the one hand, it offers the security of insurance for estate planning, asset protection and the optimization of tax aspects. On the other hand, it integrates a wealth management function that is geared towards the targeted accumulation of assets. As a result, Liechtenstein life insurance is often referred to as "foundation-light", as it offers foundation-like advantages and structuring options.
Consequently, the individual features of Liechtenstein life insurance are examined in more detail:
Asset accumulation
Asset accumulationLiechtenstein life insurance (LLV) allows you to build up assets tax-free and enjoy the benefits of investing in various asset classes such as equities, bonds, money markets or alternative assets.
Compared to bank custody accounts, the taxation of LLVs is much more attractive. While bank custody accounts are subject to capital gains tax on an ongoing basis, LLVs are only taxed when certain tax-relevant events occur during the term of the contract. This means that the LLV is not subject to taxation on dividends and the advance lump sum - depending on the investment strategy selected. Similarly, no tax is payable on the transfer of assets between different asset classes (reallocation). In a bank custody account, the tax amounts to 25% capital gains tax plus solidarity surcharge and church tax less a partial exemption, depending on the asset class.
Asset protection
Security through seizure protection and execution protection
If you insure your descendants or spouse or another third party beneficiary, you benefit from the execution and seizure privilege of Art. 78 VersVG after four years. According to this provision, neither the insurance claim of the respective beneficiary nor that of the policyholder is subject to execution or seizure against risks in business and private projects. The spouse, life partner or descendants of the policyholder who are named as beneficiaries have the option of entering into the life insurance contract and thus become new policyholders at the same time. However, the original policyholder retains control of the contract.
The granting of an irrevocable subscription right does not yet constitute an acquisition subject to inheritance or gift tax. A tax liability can only be triggered when the insured event occurs or when insurance benefits are paid out.
Security through bankruptcy protection in the event of insolvency of the insurer under Liechtenstein law
Under Liechtenstein supervisory law, the investment of the insurance policy is considered segregated assets (Art. 59a VersAG and Art. 45 of the Bankruptcy Code) and is therefore particularly protected in the event of the insurance company's bankruptcy. The capital invested therefore remains available and protected from access by creditors.
In contrast to fund policies from Germany, where the assets managed by the insurance company are classified as security assets in accordance with Section 314 of the German Insurance Supervision Act, there is no outsourcing to a special fund. This means that in the event of bankruptcy of the insurance company, these assets are part of the insolvency estate and are therefore potentially available to satisfy creditors' claims.
Estate planning
The exemption from capital gains tax not only extends to the lifetime of the investor, but also applies beyond death. This means that no capital gains tax is payable for the respective beneficiaries, even in the case of estate planning.
Ex:
|
Product type |
Bank deposit |
LLV |
|
Attachment |
100.000 € |
100.000 € |
|
Value after 20 years** |
265.330 € |
265.330 € |
|
Capital gains tax, solidarity surcharge, KiST*** |
– 32.393 € |
– |
|
Payment to heirs**** |
232.937 € |
265.330€ |
* Applies right from the start
** Excluding interim taxes on the custody account
*** Due only upon dissolution, 30% Partial exemption
**** Inheritance tax not taken into account
Another example of transferring liquid assets to subsequent generations without being exposed to high frictional losses is the use of intelligent contractual arrangements and the use of allowances to minimize inheritance tax.
The LLV also offers a holistic structure to organize the estate in the best possible way and to preserve and maintain peace in the family even after your own death. Within the LLV, the estate can be distributed according to your own wishes and objectives by specifying the beneficiaries, without having to rely on the statutory inheritance rules. In addition, specific rules can be defined, such as access to the assets only from the beneficiary's 18th birthday, for example that of a child or grandchild.
Conclusion:
Due to its tax advantages, Liechtenstein life insurance is ideal for long-term wealth accumulation and for transferring liquid assets to future generations without being exposed to high friction losses. It also offers effective asset protection for both entrepreneurs and private individuals. The aim of the LLV is to create a holistic solution for structuring and increasing assets according to your own wishes.