What are the golden rules of estate planning?

If you want to protect your loved ones from the trials and tribulations of life, estate planning is an essential consideration. Following a few of the discipline’s golden rules will prevent conflicts from arising between your heirs and ensure the calm and orderly transfer of your estate.

Who makes the rules?

The rules governing how the deceased’s assets are shared out among heirs are set forth in the Luxembourg Civil Code. Identical rules apply to both corporate and familial assets.

Who inherits?

Typically, the deceased’s direct heirs (in principle, his or her descendants, i.e. children) and the surviving spouse stand to inherit. For childless couples, the surviving spouse would theoretically be the only heir. When a person passes away with neither children nor a spouse, their assets are generally inherited by their parents (ancestors) and siblings, nieces and nephews (extended family).

Are the rules flexible?

It is possible to circumvent these rules, in particular by writing a will. In such cases, the only requirement is compliance with the rules on legal reserves. The law states that descendants (forced heirs under Luxembourg law) must receive a minimum proportion of their parents’ assets, depending on the number of children who stand to inherit. This ring-fenced amount is shared out among the deceased’s children equally.

What of inheritance tax?

Inheritance is only exempt from taxation when assets are passed on to direct heirs and the surviving spouse (with or without children in common) according to the provisions of the Civil Code. In principle, all other scenarios are taxable.

What support is available in relation to legal and tax matters?

Our estate planning experts specialise in Luxembourg and international law. They can help with any specific questions you may have regarding your personal and professional assets, and ensure that you are fully aware of how your decisions may affect your finances, taxes and estate planning.