Donation allows you to benefit your loved ones (family members or not) but also a work, an association or a congregation that you support. Donation is a serious act because, except for exceptions, it is final.
What is a donation?
To donate is to transmit during lifetime to a third party the ownership of an asset one owns.
It is therefore an important act by which the donor (the one who gives) divests himself of part of his estate (one or more assets) for the benefit of a beneficiary (the donee who must accept the donation). So that the donor is perfectly informed of the consequences of his gesture, donation requires drafting of a deed in notarial form (with exception of manual donations).
Why make a donation?
A donation can pursue several objectives:
To benefit during lifetime one or more children presumed heirs, make a donation between spouses, or to anyone the donor wishes to help;
To optimize fiscal transmission, thanks to allowances whose amount varies according to kinship link between donor and donee. These allowances renew every 15 years. Specific tax advantages are also linked to nature of assets transmitted especially in case of donation of industrial, commercial, artisanal, agricultural or liberal enterprises (Dutreil law) or of timber and forests;
To anticipate settlement of one's succession and thus avoid possible difficulties linked to partition of succession;
To organize management of one's estate: for example, a donation can be consented in exchange for an annuity. It thus constitutes valuable retirement supplement.
In what form to draft my donation?
Requirement of an authentic deed
Law requires drafting of a notarial deed for validity of a donation. Without authentic deed to record it, donation is not valid. This formalism allows protection of parties and in particular donor. Notary verifies that donor's consent is real, ensures legal effectiveness of donation and provides enlightened advice to his clients. Finally, authenticity confers on deed a certain date, probative force (until forgery claim) and executory force.
Exceptions
Manual donation:
Manual donation is a donation made hand to hand. It can only relate to movable assets (jewel or sum of money for example).
Note: giving without formality a sum of money to one of your children is possible. Be careful however. A donation must respect certain legal and fiscal rules and can generate family conflict if done without overall reflection on transmission of your assets. We invite you therefore to consult a notary before any manual donation.
Customary present:
This is a gift made on occasion of an event such as Christmas or birthday. Its value must be modest in relation to living standard and importance of estate of person making gift. If these conditions respected, customary present is not subject to donation duties, nor to legal rules applicable to donations (collation or reduction).
Donation: what can be donated?
What types of assets can be donated?
A donation can relate to immovable assets (apartment, house...) and/or movable (furniture, jewels, paintings...). Asset must however belong to donor, so it is not possible for him to make donation on asset he will acquire in future.
Can everything be donated?
Law reserves to certain family members (called 'reserved heirs') a part of estate of which they cannot be deprived.
Freedom framed in presence of reserved heir(s)
Family members who can never be totally excluded from a succession are descendants (children, grandchildren) and, in their absence, spouse. They have right to minimum part in succession of deceased parent or spouse.
Descendants
They are reserved heirs, whatever nature of filiation (natural or legitimate children and adopted children). Reserve attributed to them equals:
- — half of assets in presence of one child;
- — 2/3 of assets in presence of two children;
- — 3/4 of assets in presence of three or more children. Remainder constitutes disposable portion, which can be attributed to beneficiary freely chosen.
Spouse
Non-divorced and non-legally separated spouse is reserved heir only in absence of descendant. He then has right, at minimum, to one quarter (1/4) of succession.
Total freedom in absence of reserved heir
Other family members are not reserved heirs. Also, they can be excluded if deceased had decided to attribute all his estate to one or more other beneficiaries.
Donating to an heir: simple advance on succession or advantage?
A donation made to a reserved heir (child(ren) or failing that spouse) can be as advance on hereditary share or outside hereditary share. Donation made to non-reserved heir or stranger to succession will be imputed on disposable portion (hereditary reserve belonging to reserved heirs).
Donation as advance on hereditary share
Donation as advance on hereditary share consists for a donor in attributing to reserved heir, all or part of his share of inheritance in advance. Equality with other heirs is thus not infringed.
Donation outside hereditary share
This type of donation aims at all persons one wishes to advantage. For example, donor may advantage one or some of his children over others, however at his death notary will verify absence of infringement to rights of other reserved heirs. Failing that compensation for reduction will be due.
Note: a donation outside hereditary share can exceed disposable portion without being questioned during succession if reserved heirs have accepted it in advance. This is called advance waiver of action for reduction.
Can a donation be revoked?
A donation is irrevocable. Except for exception, it is therefore not possible to go back on a regularly consented donation.
However, donation can be revoked in three cases strictly framed by law (non-fulfillment of charges, ingratitude and supervening child).
Outside these exhaustively listed revocation cases, donation is a final act. It is therefore advisable to surround oneself with expert advice of a notary.
To keep in mind
Making a donation within framework of succession implies respecting precise rules to avoid legal and tax complications. It is essential to understand how a donation is taxed to optimize tax allowances and reduce burden of donation duties. In case of death, certain formalities must be accomplished to ensure smooth transmission of estate, and it is important to know formalities to do after a death. Another interesting option for transmission is life insurance, which allows transmitting capital in fiscally advantageous way compared to other forms of donation. However, for optimal management of succession, it is crucial to know well settlement of successions and ensure partition compliant with legal and testamentary rules. Moreover, rights of surviving spouse must be taken into account to guarantee his protection. Finally, during succession, it is important to understand order of heirs and scale of succession duties, in order to precisely determine shares of each and taxes to pay.
A donation or estate transmission project?
Our notarial office supports you to secure and optimize transmission of your assets.