Key points to consider for a successful transfer

Are you wondering about the future of your wealth when you are no longer able to manage it? The extrajudicial mandate addresses this concern. Also known as extrajudicial protection, this contract allows you to anticipate any incapacity.

Let’s take the example of a Belgian resident whose state of health no longer allows them to manage their wealth independently. Without an extrajudicial mandate, the justice of the peace will appoint one or more persons to administer their assets and watch over the individual. However, if they have taken the precaution of drafting a mandate, trusted persons they have chosen themselves – their children or third parties – will be able to assume this responsibility.  As long as they are able to manage their assets, the mandate will not have any effect. If the Belgian resident were to subsequently relocate to Luxembourg and France before becoming incapacitated, their extrajudicial mandate would be applicable in both countries.  

Organise your wealth wisely, especially if your children decide to move abroad. Tax laws can vary significantly from country to country and affect the way assets are transferred and taxed.

Let’s imagine that you have taken the initiative to organise with your notary the structuring of your assets via a Belgian ordinary partnership. You have contributed your movable assets to this company and it generates recurring income as a usufructuary. You are the manager and have already transferred the bare ownership of your shares to your children. But what happens if one of your children transfers their residence to France? What will this structure mean for a French resident and what will their tax treatment be? These questions are all the more crucial as France does not recognise this form of partnership.

Frequently reassessing your wealth is essential to adapt to changes. These may include sales, purchases, investments, goods acquired abroad or changes in tax and civil laws. Personal or family developments may also require adjustments in your planning.

Let’s look at the following example. You married in Belgium without a marriage contract and are subject to the Belgian legal regime. With the help of a notary, you have drawn up your will and planned the protection of the surviving spouse by bequeathing to them the available portion. However, your children reside for professional reasons in the Grand Duchy of Luxembourg. When you retire, you decide to be closer to your children and grandchildren and move to Luxembourg. This means your matrimonial property regime and your objectives of protecting your spouse in the event of death may be affected. Therefore, you should frequently reassess your wealth based on your situation.

Luxembourg life insurance is a flexible tool to diversify your portfolio and build up long-term savings. In addition to the financial benefit, you benefit from death cover and can freely designate your beneficiaries. However, pay attention to the wording of the clauses, which may be nominative or generic. They should be reviewed regularly depending on changes in your family situation. A poorly drafted or obsolete clause can lead to conflicts between heirs and unfavourable taxation. In the event of a family change, such as a marriage, divorce or birth, update the clause to reflect these changes. Consult a wealth advisor on a regular basis to ensure that the beneficiary clause complies with current laws and optimises the tax benefits for your heirs.

Use experts if necessary and reassess your plan frequently to ensure it remains relevant and beneficial. Also prepare your heirs to manage their inheritance. This may include open discussions about your intentions as well as training or financial advice. Preparing the next generation to manage family wealth can reduce the risk of disagreements and ensure harmonious continuity.

If you have any questions, your Private Banker and our wealth management experts are at your disposal to assist you.