The dismembered donation allows you to pass on your estate by separating a property into two distinct parts: the usufruct and the bare ownership. This mechanism has many advantages.
The dismembered donation offers several advantages both in terms of transmission of assets and succession. This mechanism consists in splitting a property into two parts: on one side the usufruct, on the other the bare ownership. The bare ownership consists in being the owner of the property, without having the right to use it or to receive income from it (such as rent). While the usufruct consists in having the enjoyment of the property (the right to occupy it or to receive income from it). Thus, the usufructuary of a property can continue to live in his home, while optimizing by anticipation the inheritance taxes that his heirs will have to pay upon his death.
Reduced inheritance taxes
By giving the bare ownership of a property while keeping the usufruct, the donor benefits from a significant reduction in gift taxes. Indeed, the calculation will not be based on the total value of the property, but only on the value of the bare ownership.
The older the donor is, the greater the value of the bare ownership. From 10% of the value of the property if the donor is less than 21 years old, it increases by 10% for each ten years: 20% from 21 to 30 years old, 30% from 31 to 40 years old... Until 90% after 91 years old.
For example, the donation of an apartment without dismemberment, worth €165,000, from a 65-year-old father to his child, generates nearly €11,200 in donation fees. By giving him only the bare ownership (thus representing 65% of the value because of the age of the donor), no tax is payable.
Duties paid by the donor
This is one of the main advantages of a split gift: the tax authorities allow the donor to pay any fees incurred, without them being considered as a donation. This payment is therefore net of taxes.
Protection of the family patrimony
By keeping the usufruct, the donor can also protect the family patrimony by avoiding that the property be sold or squandered. It is all the more interesting since the property will be divided in favor of the bare owner at the donor's death, without any new inheritance tax being applied to the full ownership of the property. The dismembered donation thus makes it possible to transmit one's patrimony progressively and in an optimized manner.
An irrevocable decision
On paper, the earlier the donation, the more interesting it is from a tax point of view. On the other hand, it is irrevocable: the sale of the property can only be done with the consent of the bare owners. This is why stripping a property before the age of 50 or 60 does not always make sense.
Applicable to other assets
Apart from real estate, the gift by dismemberment can be made on all assets, such as securities accounts or life insurance policies. The principle is essentially the same: the donor retains the portfolio income or interest, while the bare owner holds the securities or capital.
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