As every family is unique, so should be the solution.
A family story, its structure and its financial situation is truly unique. Organizing the way in which its assets are transmitted from generation to generation is a complex matter that we recommend you to entrust to specialized experts and lawyers.
Receiving the right advice allows you to transfer your assets with confidence under the best conditions.
Your wealth is often the fruit of a lifetime’s work. It can involve real estate, financial properties, a company, or abstract assets such as an art or wine collection. We can lead you to the right experts who will take into account all of your family’s tax and financial situations, to create a unique solution to meet your objectives.
For a better understanding, here are some case studies
Bequeathing wealth directly to the grandchildren
The Williams family’s case
John has one son named Charles, who has four children.
John, who is 86 years old, and Charles, who is 61, agree that 4/5ths of John’s estate will be bequeathed directly to the four grandchildren.
The best course would be for John to provide for this transfer in his will or testament. Due to the agreement with John, Charles will not claim, upon John’s death, the respect of his “reserve” share and thereforeeach grandchild will receive 1/5th of John’s estate, paying only the estate taxes on this 1/5th. If there had been no will or testament, the estate would have been treated differently. Later, when Charles dies, no more tax will be owed on this bequeathed amount. So there’s a twofold tax advantage.
The problem of inheriting assets whose value can fluctuate
The Durant family’s case
The deceased had two children, Lucy and James. He left 900,000 Euros in assets, and 200,000 Euros of debts. Alive in 1980, he gave 200,000 Euros in liquid assets to his sister Anne, and in 1981, to his brother Luke, a goodwill valued at 400,000 Euros at that moment and 600,000 Euros on the day of the death.
The children can claim 2/3rds of their father’s assets, i.e. (900,000 - 200,000 + 200,000 + 600,000) x 2/3 = 1,000,000 Euros. The freely disposable portion is 1/3rd, i.e. 500,000 Euros. The brother and the sister together received 800,000 Euros (200,000 + 600,000), i.e. 300,000 Euros above the limit. Thus the gifts to the siblings must be reduced. Given that the most recent gift has to be reduced first, the brother will have to turn over 300,000 Euros to the children of the deceased. The sister is not impacted.
In this example we can see that Luke’s situation is catastrophic because, while he received goodwill when it was valued at 400,000 Euros, he must return 300,000 Euros upon the death of his brother. He will even owe interest from the day of death until the day of restitution of the assets, if the reduction demand is made within the year or, by default, as of the day of the reduction demand.
This demonstrates that it can sometimes be disadvantageous, even dangerous, to receive assets for which value can vary.