In this case study, Nicolaas Vancrombrugge, Senior Wealth Planner – Belgium and Luxembourg, demonstrates how a post-mortem clause within a life insurance contract could be used to support succession planning for a Belgian client with a blended family.
The structure would allow the policyholder to retain control over asset distribution during their lifetime, while enabling a gradual and protected transfer of wealth to the next generation under clearly defined conditions.
The Client
- Mr Janssens has two minor children from his first marriage and has been remarried for five years.
- Part of his assets are held in a life insurance policy, where he is the sole policyholder and both he and his new wife are the insured lives.
- He wishes to ensure that his former spouse can no longer exert any influence over his assets.
- His children are designated as the sole beneficiaries of the policy.
- He wants the proceeds to go to his children upon his death, but with his new wife retaining control until they reach the age of 30.
The Solution
Mr Janssens requested a post-mortem addendum to the life insurance contract, stipulating that upon his death, the rights under the contract are transferred as follows:
- Partially and temporarily, certain rights under the contract would be transferred to his new spouse, specifically:
- The right to determine or change the investment profile.
- The right to make limited withdrawals, provided the proceeds are paid directly into the children’s bank accounts.
These rights would automatically expire when the youngest child turns 30.
- The remaining rights under the contract would then be transferred to his two children.
The Benefits
In the event of Mr Janssens’ death and the post-mortem appendix coming into effect:
- Delayed access for beneficiaries: Until the children reach the age of 30, they will not be able to exercise any rights under the insurance policy.
- Decision-making retained by spouse: During this period, Mr Janssens’ new wife will be the sole decision-maker regarding the policy, but she will not be able to make any withdrawals or surrender in her own favour.
- Automatic transfer of control: Once the children reach the age of 30, the role of Mr Janssens’ new wife will automatically expire. From that point on, the children will acquire full control over the insurance policy and its underlying assets.
- Ongoing flexibility for policyholders: The policy will continue to exist until the death of the last insured person (Mr Janssens’ new wife). However, once the children become policyholders, at the age of 30, they may choose to surrender the policy in full.