Donation: risks related to manual donations
It is possible to give a sum of money to one of your children informally. However, be careful. This "manual donation " must comply with certain legal and taxation rules and could trigger a family clash, if it is carried out, without any prior reflection.
Are manual donations authorized by law?
Certainly. The law does not forbid parents from helping their children by giving them a "big present."
This manual donation (from hand to hand) can only relate to movable property (amount of money, jewelry, painting, car, shares, etc.) and does not require any written element.
Are manual donations taxable?
Manual donations are not taxable until they have been reported to the tax authorities.
In practice, the donation is likely to be taxed in the following cases:
- when the donee declares it spontaneously for taxes.
- when the donee has been granted a new donation by the same donor or when he inherited it!
- when the donation has been brought to the attention of the tax authorities in response to a request for information or after a tax audit.
Manual donation is taxed according to the same scale as donations. Therefore, it is possible to benefit from a tax exemption.
A parent can give up to 100,000 € to each of their children without paying any rights, every 15 years. This allowance is cumulative with another 31,865€, which is granted every 15 years for money donations, if the parent is under the age of 80 and the child is over 18. Beyond that, rights are to be paid.
What are the risks of manual donation?
- The manual donation must be revalued upon the donor’s death (unlike the shared donation).
- The donee is required to report for the purposes of equality between the heirs (whoever they may be). Therefore, manual donation isn’t a means through which an heir may actually benefit.
- Manual donation by definition is not accompanied by any useful clauses (right of return, lock-up agreement ...)
- Often the non-transparent nature of the manual donation can trigger family clashes: evidence to report, re-assessment...
Even the donee can pay the price in the event of a divorce because this donation is a separate property (under the community regime) but the latter has to prove the present. This is the reason why it’s always better to ask yourself "why to give" and "how to give". Whether or not the goal is to favor a child over others: Is this child single? Married? Under what regime? Does he cohabitate with someone? Is he in a civil partnership?
Manual donation can be a quick, simple and at times a cost-effective process for passing on certain goods. However, if all of the legal, tax and family consequences are not examined, the gift can turn out to be a poisoned chalice for everyone.