4 minUnderstanding the importance of a will
Bernard Goffaux & Christophe Delanghe & Stefania Bidoli A will is a key tool for planning the transfer of an estate. Unlike a gift, it allows the testator to retain ownership of their assets until their death, while avoiding the default rules of succession law. It is often a complementary solution to other estate planning techniques.
The information contained in this article is intended for Luxembourg residents. The information contained in this article is intended for Belgian residents.
Thanks to a variety of techniques and their relative flexibility, wills can be used to tailor the transfer of the estate at the time of death, making them a powerful legal tool. Yet a large proportion of the population still neglects to draw up a will, often through ignorance or reluctance. There are several options for drafting wills available to testators:
- A notarised will is executed before two notaries or one notary in the presence of two witnesses. The will is dictated by the testator and drawn up by the notary. It is registered in the central register of last wills and testaments, which guarantees its validity. It is immediately enforceable.
- A holographic will is handwritten, dated and signed by the testator. Precautions should be taken to avoid disputes. Entry in the central register is recommended.
- A sealed will is written by the testator or by another person and presented by the testator closed and sealed, in the presence of two witnesses, to the notary. The notary draws up a notarised deed of signature. This deed of signature will be signed by the testator, the notary and the two witnesses.
- Notarised will: Drawn up by a notary and registered in the central register of last wills and testaments, which guarantees its validity. It is immediately enforceable.
- A holographic will is handwritten, dated and signed by the testator. Precautions should be taken to avoid disputes. Entry in the central register is recommended.
- International will: Suited to cross-border situations, the will is handed to the notary in the presence of two witnesses, without revealing its contents.
The contents of a will
It should be remembered that despite the flexibility of a will, it is not without limits. Under Luxembourg law, the legal reserve is a fundamental protection for certain heirs, especially children, to whom a minimum share of the estate must be allocated. The testator is therefore only free to distribute the remaining fraction, known as the “disposable portion”. Despite this constraint, a will offers several possibilities for organising the transfer of wealth, particularly by providing for specific bequests, judiciously allocating the disposable portion or anticipating the inheritance tax consequences.It should be remembered that despite the flexibility of a will, it is not without limits. Under Belgian law, the legal reserve is a fundamental protection for certain heirs, especially children, to whom a minimum share of the estate must be allocated. The testator is therefore only free to distribute the remaining fraction, known as the “disposable portion”. Despite this constraint, a will offers several possibilities for organising the transfer of wealth, particularly by providing for specific bequests, judiciously allocating the disposable portion or anticipating the inheritance tax consequences.
There are three types of bequests:
- Universal legacy: This covers all or most of the inheritance.
- Legacy under universal title: This concerns a share or category of assets. (for example: movable property or real estate)
- Individual bequest: This transfers a specific asset (for example: a sum of money or a work of art).
When drawing up a will, it is important to ensure that the wording is clear and unambiguous, and that all previous testamentary dispositions have been revoked. As a will is a unilateral act, it can be modified or revoked at any time by the testator. Unlike a gift, the testator remains the owner of their estate during their lifetime, and can therefore continue to make decisions and manage it.
Advanced estate planning techniques
Certain estate planning strategies can be used to optimise the transfer of the estate according to the testator's wealth and tax objectives. However, a will is not a way of avoiding inheritance tax.
- A so-called “generation-skipping” trust divides the inheritance directly between children and grandchildren, reducing the impact of inheritance tax.
- A bequest with “fideicommissum residue”, on the other hand, ensures the transfer of assets over several generations by allowing an initial beneficiary to use the assets while guaranteeing their transmission to a second generation, with reduced taxation.
- A “legs en duo” (conjoint legacy) is based on a mechanism combining a donation to a foundation and a bequest to distant heirs, which reduces the tax burden on the transfer and optimises the share passed on to relatives.
Prepare for the drafting process with a professional
Given the complexity of inheritance rules and the tax issues involved, we strongly advise you to seek the assistance of a notary or wealth management adviser when drawing up your will. Planning well in advance ensures that the testator's wishes are respected, while optimising the financial consequences for the heirs.
Drawing on its wealth management expertise, Banque de Luxembourg supports its clients at every stage of their lives, offering personalised advice to help them structure and pass on their wealth with complete peace of mind. Our experts can help you draw up and optimise your will to ensure that it is passed on in accordance with your wishes and tax requirements.