Which Assurance Vie brings the best security and protection? Wealth specialist Daniel Butcher reveals all
For expats with assets, Assurance Vie schemes (insurance-based investments) are ideal for reducing tax burdens, succession planning and creating capital growth. But with policies existing in France, Luxembourg and Ireland, which offers the best outcome?
Daniel Butcher, a British-born French citizen and expat wealth specialist running DTB Wealth Management in Toulouse, says Brits in France investing more than €125,000 should largely avoid the Irish-based schemes.
“These are largely proposed to the British expat community as GBP is the main currency, but experience has taught us that they’re only suitable when investing smaller amounts, less than €75,000 (in GBP),” he said. “We’ve seen clients run into problems if the policy holder deceases because those managing the Irish schemes generally have little knowledge of French inheritance laws.”
By contrast, in France or Luxembourg, all tax and succession documents are easily accessible or provided by the insurers, which is not the case for the Irish entities.
French Assurance Vie policies are far better, Butcher advises, especially considering the “fonds euro” or euro fund, which is the only fund in Europe that is absolutely guaranteed. “That said, anyone with more than €125,000 to invest may prefer to use a Luxembourg Assurance Vie provider – this is the entry point for such policies,” added Daniel.
Part of the reason for this is that a triangle of security in Luxembourg protects assets without limit, so the investor gets full capital protection. Further sweetening the Luxembourg offer is France’s ‘Loi Sapin 2’ which allows the French government to freeze Assurance Vie policies in France (not anywhere else) in a crisis scenario.
“Our clients’ Assurance Vie policies are at risk if they are held in France during a similar situation to Covid,” said Daniel. “The Loi Sapin 2 was used in March 2020, and although it wasn’t fully applied we saw the government had the power to block such schemes and acted on it. This is a reality our expat clients need to be aware of.”
In addition to Luxembourg AV schemes being better for security and protection from Loi Sapin 2, it is also beneficial for its multi-currency solution. “This makes it compatible with the UK, Spain, Portugal and Belgium,” said Daniel. “One can even open an Assurance Vie as a UK resident and then move it to Luxembourg making planning for the future even easier.”
Once deciding to take the Luxembourg route, who should you go with? “Most French insurers have their own Luxembourg AV,” said Daniel, “but for optimal results, we’d recommend our clients work with the pure players. We’d be pleased to advise interested expats on the best providers to invest with.”