Legal and tax advice on anticipated succession
Under the anticipatory succession if you understand the Transfer of assets during one’s lifetime from the transferor to subsequent generations. This can be carried out in various ways and in numerous forms. From a legal perspective, the Protecting assets, the Respect for one’s wishes the parties – first and foremost the The sender’s perceptions – and a optimal tax planning in the foreground.
Particularly in the case of substantial assets, transferring them in good time can help to prevent the tax authorities from levying inheritance and gift tax on them. In advisory practice, there are therefore numerous structuring options available. Which of these is most suitable in any given case will depend on a careful assessment of the transferor’s risk appetite, the potential for tax savings and other factors, such as the relationships between the parties involved.
The design options in detail
Usufruct is experiencing a resurgence following the 2009 inheritance tax reform. Under this arrangement, assets are transferred whilst the transferor retains a right of use over them. For tax purposes, this is essentially treated as consideration for the transfer, meaning that no taxable transfer takes place to the extent of the value of the usufruct in question. In usufruct arrangements, the age of the transferor – the usufructuary – plays an important role, as it affects the value of the usufruct for tax purposes. This planning tool is most commonly used in the transfer of property.
Chain donations & the matrimonial property regime seesaw Other popular planning strategies for making use of several tax allowances include the so-called Marital property seesaw, whereby married couples can transfer assets between themselves tax-free by making strategic changes to their matrimonial property regime.
In a traditional marriage, spouses take turns Marital property seesaw usually from the statutory matrimonial property regime of community of accrued gains to separation of property, and then back again. Any resulting claim for equalisation by one spouse against the other is not subject to tax. This arrangement is suitable where assets are subsequently to be transferred to the children, but these assets are currently attributable, in whole or in large part, to one spouse. Through the Marital property seesaw In the best-case scenario, the assets that can be transferred tax-free can be doubled.
The earlier and more carefully, the better …
The transferor usually has specific or general ideas about safeguarding their assets and ensuring their own financial security, even beyond the time of the transfer. Virtually all of the transferor’s wishes can be set out in targeted contractual arrangements that are legally sound and acceptable to all parties.
A common feature of all arrangements relating to anticipated succession is that they must be carefully prepared and implemented so as not to jeopardise the tax advantages, which play a key role in such arrangements. The tax authorities impose particularly stringent requirements for the recognition of contracts between close relatives, meaning that special care is required in this regard.
Our solicitors, specialist solicitors and tax advisers are experts in company law, inheritance law and tax law, and are always on hand to assist you with any legal matters relating to „anticipatory succession“.