Inheritance can be a complex and costly process, especially in countries like Belgium and France, where inheritance taxes are among the highest in the world.
However, there are legal avenues that individuals can explore to mitigate these expenses and make informed decisions about their legacy. One of the most common ways to reduce the financial burden of inheritance is through making donations, which can yield significant cost savings of approximately 20 to 30%.
But as is often the case in Belgium, each region has its specific regulations and determining which regional rules apply depends on the nature of the asset, whether it's real estate, business, or movable property.
For real estate, the location of the property dictates what tax applies. For business transfers or movable property, the residence of the deceased plays a crucial role in determining the applicable regional regime.
Giving it away: no easy feat
The financial advantages of making a donation are clear: on a capital worth €1 million (including a gift paid in two instalments to two children), there is a registration fee of €60,000. This is significantly less than the €235,000 that would apply if this sum were to pass onto the heirs through the conventional inheritance channels.
It's worth noting that these fees must be settled within six months of the deceased's passing; any delay results in interest charges. Unfortunately, many heirs often struggle to meet these considerable financial obligations, forcing them to resort to hasty asset sales that lead to suboptimal outcomes and create considerable stress.
Despite the undeniable financial benefits, there is a human dimension to consider. Donations can sometimes strain relationships between family members and create demands on the recipient. In other cases, recipients have been known to abandon the donor.
In a recent interview with RTBF, notary Marc Van Beneden shared a poignant example of a client who had only a niece to leave his assets to. After calculating the inheritance tax, Van Beneden's client decided that it would be far better to arrange a donation to his niece, who he feared would not be able to cope with the taxes.
Yet after this was made in two instalments, tensions boiled between the uncle and niece. The old man felt aggrieved by what he saw as a lack of gratitude. "he was very demanding: 'She didn't call me for my birthday! When I think about all the things I've done for her, the donation, the payment of duties...,' The niece finally came to see me to ask to cancel the donation because she couldn't take it anymore."
This story highlights the importance of timing and communication when making such decisions. It is crucial to consider potential changes in family dynamics, such as remarriages after a donation, which could leave new family members without a share of the inheritance.
