05.2021 Life Guide
I has the final say?Restrictions on share of inheritance
Far eastern New Century Corporation / Chen Guanhao
Since ancient times, there have been countless cases of fighting for the inheritance, leading to the opposition of close relatives. Some people presuppose wills for this purpose, hoping to avoid tearing faces between relatives in the future. However, can the distribution of the estate be in full accordance with the contents of the will? What are the norms of current laws and regulations?
Case study:
Lao Wang has three children. The eldest son and the eldest daughter are responsible for taking care of him in his later years. However, after the younger son moved out, he turned a deaf ear to his father. Even if Lao Wang was ill and hospitalized, he seldom came to visit him. When he saw him, he would only ask for money. Lao Wang was very angry and wanted to find a lawyer to write an order to prevent this unworthy son (the younger son) from inheriting his legacy. However, can this really exclude the inheritance right of the youngest son?
explain:
1、 The testamentary disposition of the estate may not violate the special provisions
In March 2020, the Taipei District Court ruled that Zhang Rongfa's handwritten will, the founder of Evergreen Group, was valid. The handwritten will said: "all my deposits and shares are inherited by Zhang Guowei, my fourth son; All the real estate is inherited by his fourth son, Zhang Guowei. On the surface, it seems that the four sons won a great victory, but in fact, Mr. Zhang Rongfa's legacy can not be completely dealt with in accordance with the way recorded in his will. Because the civil law has restrictions on the disposition of the estate by will, the decedent has the right to dispose of the estate freely within the scope of not violating the provisions on the special portion. Therefore, unless the heir loses the right of inheritance due to the circumstances listed in article 1145 of the civil law (Note 1), he can still enjoy the right of inheritance according to law.
Among the five cases of loss of inheritance listed in article 1145 of the civil law, the most common one in judicial practice is the "maltreatment" or "insult" in paragraph 5. The so-called "maltreatment" refers to the behavior that causes the "physical" or "mental" pain of the decedent, and it is not limited to positive behavior, but also includes negative behavior (refer to the Supreme Court's decision No. 4710 of the year 72). In judicial practice, the so-called negative maltreatment includes maliciously failing to support, or parents lying in bed all the year round, and heirs refusing to visit until the decedent dies without justifiable reasons (Note 2). However, according to the case, Lao Wang's youngest son only paid "very little" visits, not to the extent that he did not visit all the time, and did not insult Lao Wang, which should not constitute a loss of inheritance.
To sum up, even though Lao Wang made a will in accordance with the law, excluding the younger son from inheriting his legacy, the younger son still has the right to inherit the special portion of Lao Wang's legacy.
2、 Planning heritage with insurance
In view of the above restrictions on testamentary disposition of the estate, some people also use insurance to plan the inheritance of the estate. Among them, the most common way is to designate the beneficiary of the "death insurance" because the death insurance is not included in the total amount of the estate according to law (Note 3). The designated beneficiary obtains the insurance according to the insurance contract, not inherits the estate. However, it must be noted that the purpose of death insurance is to spread the risk and ensure the life care of the deceased (Beneficiary) in the event of sudden death of the insured, rather than as a tool for tax avoidance, investment and financial management. If the insured amount exceeds the legislative intent, it may still be included in the total estate tax by the IRS according to the "substantial taxation principle" (Note 4). In addition, the total amount of death insurance benefits (death benefits) received by each applicant (Note 5) in the whole year exceeding NT $33.3 million still needs to be included in the basic personal income to calculate the comprehensive income tax (Note 6).
In addition, it should be noted that the above provisions not included in the total amount of estate are only applicable to death insurance benefits. Many types of life insurance in the market are paid at the end of the life insurance period, rather than after death. For example, survival insurance (savings insurance), life and death insurance (endowment insurance), etc. the insured person and the beneficiary are different, May be subject to the IRS in accordance with the principle of substantial taxation, determine the need to pay gift tax (or estate tax).
In addition, the use of insurance for estate planning can only be used in the cash part, and it can not be used for other assets (real estate, movable property, etc.), and when the cash position is large, it is also necessary to plan early and pay attention to the death tax allowance, otherwise there is still the risk of being charged with gift tax (the proponent) and the minimum tax burden of income tax (the beneficiary).
Reference: Ministry of Finance Tax Portal - tax information - understanding tax - tax Q & A - National Tax Q & A https://www.etax.nat.gov.tw/etwmain/web/ETW118W/VIEW/410
Note 1: Article 1145 of the civil law: "in case of any of the following circumstances, the right of inheritance shall be lost: 1. The person who intentionally causes the decedent or the heir to die or, though not dead, is sentenced. 2、 Deceiving or coercing the decedent to make a will about inheritance, or withdrawing or changing it. 3、 To defraud or coerce the decedent to interfere with the will of the decedent, or to interfere with the withdrawal or alteration of the will. 4、 Forgery, alteration, concealment or annihilation of the will of the decedent. 5、 If the decedent is seriously abused or insulted, and the decedent indicates that he is not allowed to inherit. The provisions of subparagraphs 2 to 4 of the preceding paragraph shall not deprive the heir of his right of inheritance if he is excused. "
Note 2: "if physical or mental pain is inflicted on the decedent, any person who assaults the decedent, or who maliciously refuses to support the decedent due to the obligation of supporting him, shall be included. That is to say, the decedent (parents) is sick all the year round, and the decedent has no justifiable reason for not being able to visit the decedent, but has not visited the decedent until his death, In our country, we attach great importance to the inherent ethics of filial piety, which is enough to cause the heir to feel great mental pain. We should also recognize that he has committed serious abuse (referring to the Supreme Court's 74-year-old taishangzi No. 1870 case)
Note 3: Article 112 of the insurance law: "if the insured amount is agreed to be paid to the beneficiary designated by the insured at the time of death, the amount shall not be regarded as the estate of the insured."; Article 16 (9) of the inheritance and donation tax law states: "the following items shall not be included in the total amount of the inheritance: 9. It is agreed that upon the death of the decedent, the amount of life insurance, the amount of insurance and mutual aid payment of the military, public education personnel, labor or farmers' insurance of the designated beneficiary shall be paid."
Note 4: the Ministry of finance has reorganized 19 cases which were included in the estate tax by the IRS in the past according to the principle of substantial taxation. The contents include three major categories and nine main features, including: physical condition (serious illness insurance, old age insurance), insurance method (intensive insurance, large amount insurance, single payment insurance, debt insurance), insurance premium and premium comparison (insurance premium equals premium, old age insurance) The premium is equal to the premium paid plus interest, and the premium is lower than the premium paid).
Note 5: the basic unit of individual comprehensive income tax is "Declaration account". For single person, the declaration account can only have one person. For married person, the declaration account must be the same as that of spouse. In addition, dependent relatives should also be included in the declaration account.
Note 6: 1. If the beneficiary and the proposer are not the same person, the part of life insurance and annuity insurance payment belongs to death payment, and the total annual amount of a reporting account is less than 33.3 million yuan, it will not be included in the basic income; If the amount exceeds 33.3 million yuan, the death payment shall be included in the basic income by deducting 33.3 million yuan. 2. If the beneficiary and the proposer are not the same person, the non death part of the life insurance and annuity insurance payment shall be included in the basic income, and the tax exemption of 33.3 million yuan shall not be deducted. 3. As for health insurance payment, injury insurance payment, and life insurance and annuity insurance payment with the beneficiary and the proposer as the same person, they are not included in the basic personal income, and there is no tax exemption of 33.3 million yuan.
Case study:
Lao Wang has three children. The eldest son and the eldest daughter are responsible for taking care of him in his later years. However, after the younger son moved out, he turned a deaf ear to his father. Even if Lao Wang was ill and hospitalized, he seldom came to visit him. When he saw him, he would only ask for money. Lao Wang was very angry and wanted to find a lawyer to write an order to prevent this unworthy son (the younger son) from inheriting his legacy. However, can this really exclude the inheritance right of the youngest son?
explain:
1、 The testamentary disposition of the estate may not violate the special provisions
In March 2020, the Taipei District Court ruled that Zhang Rongfa's handwritten will, the founder of Evergreen Group, was valid. The handwritten will said: "all my deposits and shares are inherited by Zhang Guowei, my fourth son; All the real estate is inherited by his fourth son, Zhang Guowei. On the surface, it seems that the four sons won a great victory, but in fact, Mr. Zhang Rongfa's legacy can not be completely dealt with in accordance with the way recorded in his will. Because the civil law has restrictions on the disposition of the estate by will, the decedent has the right to dispose of the estate freely within the scope of not violating the provisions on the special portion. Therefore, unless the heir loses the right of inheritance due to the circumstances listed in article 1145 of the civil law (Note 1), he can still enjoy the right of inheritance according to law.
Among the five cases of loss of inheritance listed in article 1145 of the civil law, the most common one in judicial practice is the "maltreatment" or "insult" in paragraph 5. The so-called "maltreatment" refers to the behavior that causes the "physical" or "mental" pain of the decedent, and it is not limited to positive behavior, but also includes negative behavior (refer to the Supreme Court's decision No. 4710 of the year 72). In judicial practice, the so-called negative maltreatment includes maliciously failing to support, or parents lying in bed all the year round, and heirs refusing to visit until the decedent dies without justifiable reasons (Note 2). However, according to the case, Lao Wang's youngest son only paid "very little" visits, not to the extent that he did not visit all the time, and did not insult Lao Wang, which should not constitute a loss of inheritance.
To sum up, even though Lao Wang made a will in accordance with the law, excluding the younger son from inheriting his legacy, the younger son still has the right to inherit the special portion of Lao Wang's legacy.
2、 Planning heritage with insurance
In view of the above restrictions on testamentary disposition of the estate, some people also use insurance to plan the inheritance of the estate. Among them, the most common way is to designate the beneficiary of the "death insurance" because the death insurance is not included in the total amount of the estate according to law (Note 3). The designated beneficiary obtains the insurance according to the insurance contract, not inherits the estate. However, it must be noted that the purpose of death insurance is to spread the risk and ensure the life care of the deceased (Beneficiary) in the event of sudden death of the insured, rather than as a tool for tax avoidance, investment and financial management. If the insured amount exceeds the legislative intent, it may still be included in the total estate tax by the IRS according to the "substantial taxation principle" (Note 4). In addition, the total amount of death insurance benefits (death benefits) received by each applicant (Note 5) in the whole year exceeding NT $33.3 million still needs to be included in the basic personal income to calculate the comprehensive income tax (Note 6).
In addition, it should be noted that the above provisions not included in the total amount of estate are only applicable to death insurance benefits. Many types of life insurance in the market are paid at the end of the life insurance period, rather than after death. For example, survival insurance (savings insurance), life and death insurance (endowment insurance), etc. the insured person and the beneficiary are different, May be subject to the IRS in accordance with the principle of substantial taxation, determine the need to pay gift tax (or estate tax).
In addition, the use of insurance for estate planning can only be used in the cash part, and it can not be used for other assets (real estate, movable property, etc.), and when the cash position is large, it is also necessary to plan early and pay attention to the death tax allowance, otherwise there is still the risk of being charged with gift tax (the proponent) and the minimum tax burden of income tax (the beneficiary).
Reference: Ministry of Finance Tax Portal - tax information - understanding tax - tax Q & A - National Tax Q & A https://www.etax.nat.gov.tw/etwmain/web/ETW118W/VIEW/410
Note 1: Article 1145 of the civil law: "in case of any of the following circumstances, the right of inheritance shall be lost: 1. The person who intentionally causes the decedent or the heir to die or, though not dead, is sentenced. 2、 Deceiving or coercing the decedent to make a will about inheritance, or withdrawing or changing it. 3、 To defraud or coerce the decedent to interfere with the will of the decedent, or to interfere with the withdrawal or alteration of the will. 4、 Forgery, alteration, concealment or annihilation of the will of the decedent. 5、 If the decedent is seriously abused or insulted, and the decedent indicates that he is not allowed to inherit. The provisions of subparagraphs 2 to 4 of the preceding paragraph shall not deprive the heir of his right of inheritance if he is excused. "
Note 2: "if physical or mental pain is inflicted on the decedent, any person who assaults the decedent, or who maliciously refuses to support the decedent due to the obligation of supporting him, shall be included. That is to say, the decedent (parents) is sick all the year round, and the decedent has no justifiable reason for not being able to visit the decedent, but has not visited the decedent until his death, In our country, we attach great importance to the inherent ethics of filial piety, which is enough to cause the heir to feel great mental pain. We should also recognize that he has committed serious abuse (referring to the Supreme Court's 74-year-old taishangzi No. 1870 case)
Note 3: Article 112 of the insurance law: "if the insured amount is agreed to be paid to the beneficiary designated by the insured at the time of death, the amount shall not be regarded as the estate of the insured."; Article 16 (9) of the inheritance and donation tax law states: "the following items shall not be included in the total amount of the inheritance: 9. It is agreed that upon the death of the decedent, the amount of life insurance, the amount of insurance and mutual aid payment of the military, public education personnel, labor or farmers' insurance of the designated beneficiary shall be paid."
Note 4: the Ministry of finance has reorganized 19 cases which were included in the estate tax by the IRS in the past according to the principle of substantial taxation. The contents include three major categories and nine main features, including: physical condition (serious illness insurance, old age insurance), insurance method (intensive insurance, large amount insurance, single payment insurance, debt insurance), insurance premium and premium comparison (insurance premium equals premium, old age insurance) The premium is equal to the premium paid plus interest, and the premium is lower than the premium paid).
Note 5: the basic unit of individual comprehensive income tax is "Declaration account". For single person, the declaration account can only have one person. For married person, the declaration account must be the same as that of spouse. In addition, dependent relatives should also be included in the declaration account.
Note 6: 1. If the beneficiary and the proposer are not the same person, the part of life insurance and annuity insurance payment belongs to death payment, and the total annual amount of a reporting account is less than 33.3 million yuan, it will not be included in the basic income; If the amount exceeds 33.3 million yuan, the death payment shall be included in the basic income by deducting 33.3 million yuan. 2. If the beneficiary and the proposer are not the same person, the non death part of the life insurance and annuity insurance payment shall be included in the basic income, and the tax exemption of 33.3 million yuan shall not be deducted. 3. As for health insurance payment, injury insurance payment, and life insurance and annuity insurance payment with the beneficiary and the proposer as the same person, they are not included in the basic personal income, and there is no tax exemption of 33.3 million yuan.
