Succession: Expect to pass more donations to your child

An additional €50,000 in donations without tax payable, given every 15 years to each of his children… Undoubtedly, the planned reform will speed up all direct transfers. and reduce the total amount to be paid upon death, including if, as sometimes happens, it is in favor of one member of the same sibling. Detailed explanations.

Expected fix

The donation allowance should therefore be increased from €100,000 per donor and per child to €150,000. It makes sense that it would also apply in the case of succession. However, nothing has been said regarding the period after which this allowance will be reconstituted, even if, to avoid a sharp decline in tax revenue, it should remain at 15 years. But any shortening to 10 years (the deadline effective before August 17, 2012), or even 6 years (the deadline applied this time before July 31, 2011), would obviously lower the bill further. Marion Calmette stresses that “parents who have already made a donation less than 15 years ago will be equally concerned: they will benefit from the remaining 50,000 euros in tax-free donations, that is, the difference between the old and new ceiling.” , heritage engineer at SG Private Banking.

For blogging: The possibility to donate, also every 15 years, up to €31,865 in funds must still apply. However, it is only applied if the child is an adult and the donor is not over 80 years old. Altogether, it would then be 186,565 euros that a parent could transfer to their child every 15 years. A total of 727,460 euros in the case of spouses with two children.

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How to treat all beneficiaries fairly

This new allowance will significantly reduce the bill for early transportation, and give out equally among children. As our table shows, it was created to divide the legacy of €900,000 between two children (and without taking advantage of the possibility of giving €31,865 of money), the note will actually, upon death, be reduced by €10,000 for each child, even if the donor does not prepare anything.

But if the parent knew how to anticipate his succession, by agreeing to two joint donations, during a period of at least 30 years before death, the overall result would simply be erased. For a tax of over €28,000 per beneficiary, in the current system. It should be noted that with the new bonus, it is a cumulative supplement of 150 thousand euros of donations to be transferred, in three instalments, tax-free. Thus, interest in doing so early on, and transmitted during one’s life, will be fostered.

be careful, These tax considerations will not prevent disagreement if the recipient of equal donations will have different fortunes upon your death. In fact, all donations made must be reported to the estate at their current value at the time of death. So that a child who had acquired an apartment, the price of which was estimated, could compensate a brother or sister who, at that time, had received a purse on the stock market at an equivalent value, but which would then depreciate. The danger, then, is that this child’s genetic reserve will be affected.

If the children can still be required, before the notary, to waive any subsequent “action for reduction”, the best thing is to proceed, again before the notary, to the sharing of gifts. It will make it possible to permanently freeze the value of the goods appearing in the act, regardless of their subsequent difference.

Multiple variations are possible, such as a joint donation, or a joint donation with a usufruct reserve. If you don’t need to be equal, it also has the benefit of allowing past rewards to be returned (then a 2.5% participation fee is charged). The applicable tax deductions are the same as for a simple donation. The only additional cost that can be expected is the notary’s fee, on a graduated scale, which comes to approximately 1% for items over €60,000.

How do you prefer a particular beneficiary?

As our table shows, the multiplier effect of the new allowance will also appear if you want to favor one of your children over one or more children. Still for a €900,000 legacy transfer, a favorite child will see their tax note melt by €10,000, whether or not the succession is foreseen, through two donations during the donor’s lifetime. As for a child who has not been given a privilege, he will at least be happy to see his tax bill reduced significantly, by €10,000 if nothing is expected, and by about €20,000 if it is set up.

be careful However, to correctly calculate the amount of donations or legacies. “The risk, otherwise, is to start the genetic reserve for other children, who can then claim their dues at the time of the succession,” recalls Benoit Perchebro, Director of Heritage Engineering at Nortia. But feel free to use the part that is available, this share of the heritage that you can dispose of freely. It is not trivial, as it reaches a third with two children, as in our example, and a quarter for three children, and thereafter. Thus, the total share of your assets that the same child will be able to acquire without robbing others will be 66% if the family has two children, and even 50% if it has three.

It is clear that this distribution is made at death, by will. But most of the time, it’s too early to want to help one of your children with their studies or their start in working life. In such a situation, it will be necessary to make a donation during his lifetime, with the exception of inheritance. This may be irrevocable, provided it is determined before a notary.

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(1) Mary, two children, has total assets of 900 thousand euros. She seeks to treat her two children fairly. In the case where she anticipated her succession, she gave them the same donation twice, improving tax cuts (100,000 euros without reform, and 150,000 euros if reform was adopted), with a 15-year tax reminder period. So she did it early, if possible before her fiftieth birthday.
(2) Mary, two children, has total assets of 900 thousand euros. She seeks preference for one of her children, without affecting the genetic reserve of the second (a third of the assets of the estate). Should she anticipate her succession, she gave them a donation twice, improving tax cuts (100,000 euros before the reform, and 150,000 euros if the reform was adopted), with a 15-year tax reminder period. So she did it early, if possible before her fiftieth birthday.
(3) Mary made a will expressing her desire to allocate the available portion of her inheritance to only one of her children at the time of the succession.
(4) Mary prefers her first child by donation outside the inheritance.

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