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Wallonie - Brussels
Chaussée de La Hulpe, 120 – 1000 Brussels
FLANDERS
Kortrijksesteenweg 218 – 9830 Sint-Martens-Latem
30 November 2023
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3 minGood management of movable property can mean handing it all over while retaining a degree of control
Shares in a family business, an art collection, watches, cars... an inheritance is not just about buildings. So what is the best way to transfer movable assets to the next generation? We asked Christophe Delanghe, Senior Estate Planner at Banque de Luxembourg Belgium.
Article published on L’Echo website.
What do we need to think about when planning for the transfer of movable property?
“First and foremost, it is not something to be treated in isolation. When planning the handover of your estate, you should always take a big picture view, with movable property as just one component of your entire estate. You need to make a complete inventory of your assets and consider who owns them today. In this respect, legal protection varies depending on your marital status. While convenient from a legal point of view, some marital agreements can have punitive tax consequences. A marriage contract can be amended, however, so be prepared to get it out of the drawer.”
Why is gifting so popular?
“Gift tax rates on movable property are still much more advantageous than inheritance tax. Add to this a whole generation of baby boomers who have accumulated significant wealth and are now keen to give a helping hand to their children, and their children. In Flanders, for example, grandparents can gift a legacy of up to 12,500 euros to their grandchildren, exempt from inheritance tax.”
Is it possible to gift assets and still have some control over what happens to the estate?
“While keeping in mind that any gift implies an irrevocable impoverishment on the part of the donor, there are different ways of proceeding. The lowest level of control is linked to transferring full ownership of an asset. You can, however, allow yourself the possibility of reclaiming the donated property if your donee predeceases you. You can then bequeath the property to the next generation yourself and avoid it being subject to inheritance tax. You can also require the beneficiary to keep the gifted asset under their personal ownership so it cannot be considered as a contribution to a conjugal partnership or included in any compensation between spouses or cohabitants. Or you can provide for the possibility of receiving an annuity in the event of unexpected financial need, amounting to 3% or 4% of the property transferred, for example. Another option is to temporarily restrict the benficiary from transferring the property - as collateral for a loan, for example - without prior agreement.”
What about bare ownership transfers?
“In this case, the donor keeps the usufruct rights. If it is a securities portfolio, the donor will continue to receive interest and dividend income. The securities portfolio can thus be seen as a shell within which the donor, as beneficial owner, may still manage the individual components. The donor continues to control the financial management of the underlying assets until the next generation is ready to take over the reins.”
Are there more possibilities in regard to seller’s control?
“Yes. By setting up a simple partnership, you can create a control framework governed by rules freely defined in the Articles of Association. This allows the donor and donees to work together to grow the estate and protect its integrity. As statutory manager, the head of the family retains strong but not absolute control, justifying their management decisions at annual general meetings. As a Bank, we can assist with this model, which can be an excellent learning process for the next generation. On paper, it’s an ideal formula, but bear in mind that, as with any company, there are rigorous legal, administrative and publicity requirements, which can seem burdensome.”
