15 May 2018

The new inheritance law: what are the rules on gifts with reservation of usufruct?

A gift with reservation of usufruct is a very popular means of inheritance planning. When the giver subsequently dies, the usufruct lapses and is recombined with the bare ownership without inheritance tax. This remains the case in the new inheritance law , but partly as a result of the scrapping of the requirement on – and by – the surviving spouse to bring gifts into the estate, and the introduction of the right to maintained usufruct, closer attention needs to be paid to the position of the surviving spouse.

The old inheritance law vs the new inheritance law

Take a situation where a father wishes to make a gift of shares from his own assets to his daughter, reserving usufruct for himself.


 The purpose of this is to provide himself with income and control over the shares and the underlying business for as long as he deems necessary. This will help maintain the standard of living of the father, and hence too of the mother. As a rule, the father will also want the mother to be spared financial worries, without burdening her with decisions about the business.

Under the old inheritance law, the surviving spouse could require other legal heirs to bring gifts into the estate, and was also obliged to bring the gifts he or she had received from the first spouse. On the death of the father, the mother could therefore require usufruct in respect of gifted assets, for example in the form of an annuity on movable property. A decision may also be made that usufruct will go to the surviving spouse, for example, with a usufruct reversion clause. In many cases, however, the surviving spouse is involved and approves the gift to the children, or the father exempts the children from contributions to the surviving spouse, either at the time of making the gift or later. From 1 September 2018 this contribution of gifts by or to the surviving spouse will be abolished. This affects the rights of the surviving spouse, and the legislators have come up with a new measure by way of compensation (Article 858 bis § 3 of the Civil Code): ‘the right to maintained usufruct:

‘On the death of the giver, the surviving spouse shall automatically receive usufruct in respect of the assets that the giver has gifted and in respect of which he/she has reserved usufruct, provided that the spouse had that capacity at the time of the gift.’

The legislators have therefore made a rule that the surviving spouse (in this case the mother) obtains usufruct on previously gifted assets, in maintenance of the usufruct that the giver reserved for him- or herself (provided that the giver still had usufruct when alive). This is a rule of supplementary law, which means that it is possible to deviate from it if the usufruct is not intended to pass to the surviving spouse. This can be done by the surviving spouse waiving usufruct in the deed of gift, or later by inheritance agreement. Furthermore, the giver can also rule out maintained usufruct in his or her will.

From now on it is therefore important when making gifts with reservation of usufruct to consider the desired situation for the surviving spouse (usufruct or not?).  As the Flemish legislators responsible for bringing inheritance tax up to date have included a provision in their preliminary draft bill of 2 March, confirmed in the final draft of 4 May 2018, stating that this maintained usufruct will be subject to inheritance tax, it is also important to think about the position of the surviving spouse from a tax point of view.

Whether a gift has to be brought into the estate is determined by the rules that apply at the moment when the gift is made. The new rules therefore only apply to gifts made after 31 August 2018.

Sales tax in the event of the retirement of fixed assets from a BVBA through dividend payment in kind

The general principle is that in the event of a retirement of a fixed asset from the company into the private assets of the partner, a sales tax of 10% is due. 

Estate Planning

Do you have any further questions about this? Then be sure to contact our advisors! Let's talk!

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