The Federal Court of Justice (BGH, ruling of 25.09.2019, ref. IV ZR 99/18) had to deal with the life insurance of a policyholder (VN) who had fallen into a coma in 1993 after an accident. The wife, who was divorced in 1994, was entitled to withdraw her claim. The father of the UN informed the insurer (VR) “as supervisor” that the subscription right should be changed to him – which the VR confirmed to him. The UN died in 2011. The (underage) daughter became the sole heir; the BoD paid the death benefit to the presumed beneficiary. Years later, this was reclaimed by the BoD, because the (ex-)wife, as the beneficiary, in turn successfully demanded the insurance payment from the BoD in 2013.
Insurer successfully reclaims the sum insured paid out
The BoD was successful before the Federal Court of Justice (BGH) because the UN in its capacity as insured person (VP) did not give its consent to the change in subscription rights – neither in written nor notarial form, Section 126 BGB. The father and lay caregivers were or are – perhaps even today – not aware of all the design options and pitfalls. In a special type of coma with limited communication possibilities, a notary could have been called as a hospital bed.
In addition, in case of doubt, one will doubtless doubly safeguard disposals of life insurance policies by making them subject to last will and testament – in order to rule out later revocation by non-beneficiaries; or by making them irrevocable in time to make them resistant to competition.
Protective purpose of the consent of the insured person
The Federal Court of Justice takes into account that if bets are placed on my head, I (as an insured person, for example) must agree to it. Finally, this is required by the protective purpose of § 159 VVG: “According to Senate case law, the consent requirement aims to prevent speculation with the lives of others. In particular, it is intended to counteract the danger that may result from the fact that the policyholder or another party involved is in a position to cause the insured event. The person to be insured should be aware of the hazard and be able to weigh up the risk he or she is willing to accept with his or her consent (Senate decision of 27 June 2018, ibid. para. 24 w.m.n.)”. The beneficiary in the event of death knows that the UN must die before the end of the term so that he, and not the UN, receives the money.
Lay caregiver did not have the necessary court approvals or formalities
For his declaration “as a guardian”, a so-called order as a legal transaction, he should have obtained the approval of the guardianship court in time – which, however, was not given due to a lack of qualified advice and implementation support, §§ 1812, 1813, 1831 BGB. Therefore, the change in subscription rights had been ineffective from the beginning.
The fact that he acted “as a supervisor” ruled out the possibility that he was only “acting as a messenger”, § 164 BGB.
Well meant is not necessarily well done
The father, as a lay caregiver, thought altruistically – he wanted to “save” the money for the daughter of the deceased, the sole heiress; by first getting the insurance benefit – only later, when he came of age, his grandchild from him. That this would trigger unnecessary “double” and potentially higher inheritance or gift tax had obviously not occurred to him either?
After all, the daughter and sole heir could have been favored at once – foreseeable, however, not without the approval of the family court. If such approvals are overlooked, “tax saving or tax shifting models” with capital investments for children are often threatened with retroactive non-recognition by the tax office even years later.
Who knows only the hammer – for him every problem is a nail
For real tax savers, the mere structuring of the subscription right is only the tired beginning of a goal-oriented design. If the UN and the beneficiary are two different persons, inheritance or gift tax is often avoidable. While there may still be six-figure tax-free allowances for spouses and children, this amounts to only EUR 20 thousand for non-marital partners.
For shareholders of a company who want to protect each other, it also depends on who acts as UN – and on whose head the board of directors is betting. The differences in the insurance case, but also before, in income and gift tax are usually enormous – especially since a tax exemption at payout can beckon if everything has been carefully arranged.
By including questions of maintenance – whether it concerns children, spouses or non-marital partners – further tax exemptions can be achieved. The deposit and withdrawal phases must always be considered.
The “eternal” right of revocation had not (yet?) been known to the guardian and sole heir
As an alternative to revoking the subscription right, the father of the UN, in his capacity as “guardian”, could also have revoked the insurance contract. If necessary, not without examining whether a court would have to approve anything in this regard.
And of course, the heiress, possibly represented by her guardian, could possibly not have declared the revocation herself as a minor without court permission either – at best before “first the wrong person and later the right person” receives the money as the beneficiary. Perhaps a revocation would even have saved one’s own grandfather and ex-layman’s guardian a legal dispute that would have lasted many years – and would have resulted in a far higher payment by the BoD to itself; for revocation can mean far higher amounts in economic terms than a normal contractual payment of insurance benefits by the BoD.
Rarely helpful notarial safeguarding in case of later over-indebted estate
You could save yourself the trip to the notary, for example to have a will drawn up or to secure a gift of the assets in the life insurance, if later on an insolvency administrator successfully draws these assets to the mass. Whether the insolvency administrator is really entitled to the assets from the life insurance policy can be easily arranged – even without a notary.
The optimal situation for the beneficiary is if he does not have to deliver the money received from the BoD to the BoD or the insolvency administrator years later. Thus it happens again and again that a “felt good security” is withdrawn by revocation even from the testator’s own bank years after the death (economically and factually retroactively).
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.experten.de (published on 19.12.2019)
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About the author
PhD, MBA, MM
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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