August 3, 2022
Meeting Begoña and Alejandro
Alejandro and Begoña, who have been married for twenty years, left Spain for Mexico 10 years ago. Alejandro, an engineer specialised in the petroleum sector, was asked by a Spanish company to supervise the operations of several refineries of its Mexican subsidiary. Begoña followed her husband. Their two children, Maria and Juan, are currently attending secondary school in the capital which follows the Spanish curriculum so as to facilitate a possible return.
Over the course of his career and thanks to several positions abroad, Alejandro has been able to build up comfortable savings, to which has been added a small inheritance. Today, he has a net worth of EUR 1.8 million. He would like to invest this money to see it grow, but also wants to protect his wife and children in the event of his death.
- Ensure confidentiality as to the extent of their assets
- Protect the assets from the country’s political and economic instability
- Prepare for a future return to Spain under the best possible tax and financial conditions
The OneLife solution
The couple’s advisor thinks Luxembourg life assurance will be the best solution for their situation.
After consulting with OneLife experts in the Spanish and Mexican markets, he proposes the following solution:
- Begoña and Alejandro jointly purchase – as they are married under a community of property regime – a Spanish life assurance policy.
- As they still reside in Mexico, the insurance policy will be checked by a specialist in the Mexican market to ensure that it is fully compliant with local legislation.
- The lives assured are those of Alejandro and Begoña. The children are designated beneficiaries. The policy is transferred to the surviving spouse on the death of the other spouse.
- To benefit from maximum flexibility, the assets dedicated to the policy will be placed in an internal dedicated fund (IDF). The management of these assets will be entrusted to a fund manager licensed in Spain.
- The assets in the insurance policy will be entrusted to a Spanish custodian bank approved by the Luxembourg Commissariat aux Assurances (CAA). The policy will therefore benefit from the Triangle of Security, a protection framework specific to Luxembourg life assurance.
Meeting the objectives
From a wealth management point of view
- The policy stays confidential as it is known only to the policyholders and to OneLife.
- All of the couple’s movable assets will be protected from the vagaries of life in Mexico, as their assets will be held in a Spanish bank, administered by a Spanish asset manager and accounted for in a Luxembourg life assurance policy.
- Alejandro and Begoña are offered a solution that provides the highest degree of protection possible.
- The insurance policy is subject from the outset to Spanish legislation, and is therefore already adapted to a future return home.
From a tax point of view
During the lifetime of the policy
- No tax will be due in Mexico on payment of the premium on the insurance policy.
- During their stay in Mexico (and then in Spain), portfolio income will not be taxed in Luxembourg (principle of fiscal neutrality).
- Taxes will only apply in the event of partial or total redemption: marginal taxation of 35% in Mexico and 26% in Spain.
- The policy will not be taxed when moving to Spain, as long as it remains in force.
At the settlement of the policy
- If the death occurs after their return to Spain, inheritance tax will be subject to Spanish law. The tax scale applied varies between 7.65% and 34% (marginal rate applicable to amounts greater than EUR 797,555) and depends on the region of residence, the deceased’s total assets and kinship. Everything will therefore depend on Alejandro and his family’s situation at the time of his death.
With OneLife, Alejandro and Begoña found a confidential solution adapted to their needs and plans, which ensures them the best possible protection for their assets.
Want to know more?
Discover in our whitepaper the benefits of Luxembourg life assurance and its application through some practical cases.
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