Law of succession: Inter vivos property divisions and division among grandchildren
An inter vivos division of an estate means to organise the division of one's assets , in one's lifetime. It may be made for the benefit of one's children or grandchildren.
What is involved in the inter vivos distribution?
A division of this type involves the transfer and division of all or some of one's assets in one's lifetime, unlike a will whose provisions only come into effect on the death of the testator. It is therefore a gift combined with a division, which cannot be challenged when the donor's succession is opened.
It enables the donor's beneficiaries to receive some assets immediately (even if the donors retain the use of the assets, by setting up a usufruct for example). A division of this type must be effected with the assistance of a notaire. An inter vivos division will only be valid if it is recorded in a notarised instrument. It must also be accepted by all the beneficiaries.
What are the advantages of an inter vivos distribution?
Gifts present numerous tax advantages. Recent provisions in this field have effectively encouraged families who wish to transfer their assets early.
At the present time, the tax allowances applicable to gifts are renewed every 15 years (€100,000 per child and per donor). Furthermore, the assets are assessed on the day of the gift and not on the day of the death.
Finally, and above all, an inter vivos division, unlike traditional gifts or gifts handed over in person, preserve family harmony when there are several children.
Who can benefit from a division of this type?
Divisions of this type are no longer limited to one's children. A person without children may, for example, anticipate the transfer of their assets to their presumptive heirs (the individuals who are entitled to inherit the donor's estate). Depending on the situation, this may mean the donor's father, mother, brothers or sisters.
Can grandchildren be included in the division?
Yes. It possible to include children and grandchildren in this type of division. In this case, the division is known as a donation -partage transgénérationnelle. It must also be accepted by all the beneficiaries.
A division of this type has not insignificant tax advantages. It gives each grandchild (Major or minor emancipated) the right to a specific allowance of €31,865* per grandparent, which may be renewed every 15 years.
Over and above this sum, duty must be paid to the Inland Revenue. The amount is calculated in proportion to the amount given. The percentage varies from 5% to 45%. It is calculated in the same way as inheritance tax.
For example, if grandparents have three grandchildren, they may give them up to €189,370, without paying any gift tax:
- for the grandfather: €31,865* x 3 grandchildren = €95,595
- for the grandmother: €31,865* x 3 grandchildren = €95,595
This allowance of €31,865* may be combined with the disabled persons' allowance and with that provided for the donation of cash when the donor is under 80 years of age. It also applies to gifts made to great grandchildren when they take the place, in the succession, of a parent who has already died.
* These amounts change every year on January 1st.