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Belgium allows generation skipping
 
The Act of 10 December 2012 is a first step in the modernisation of the Belgian inheritance law that was announced by the Minister of Justice. For the first time it will be possible to jump a generation in the application of the inheritance law.

Since 21 January 2013, the grandchildren can inherit directly from their grandparents. Upon the death of a grandparent, the children can decide each individually to waive their right to inherit in favour of their own children, the grandchildren. The grandchildren will be substituted in the rights of their parents and they will inherit directly from their grandparents.

Generation skipping means that inheritance tax is not paid twice on the same inheritance: first by the children, and a second time by their own children when their parents die.

Generation skipping can save on inheritance tax on one generation, but it does not mean that the inheritance tax can be reduced even further because the inheritance tax is spread over more heirs of the third generation.Indeed, Article 68 of the Inheritance Tax Code remains in force; this article states that the amount of the inheritance tax that is normally due by the heir who waives the inheritance tax, shall be paid by those for whose benefit he waived.

In other words, the inheritance tax will be calculated as if the heir waiving the inheritance had effectively inherited. E.g. a son waives inherit the right to inherit €1 million in favour of his four children. The inheritance tax will be calculated as if the father (who is waiving) had inherited (30% (27% in Flanders) on every euro over € 500 000) and not as if the grandchildren had inherited directly (four times the inheritance tax calculated on € 250,000).

However, the transmission of property to the grandchildren is valid from a civil point of law.  They are the owners of the estate they inherited and they must, therefore, not pay inheritance tax on the estate anymore upon the death of their father.

Please note that generation skipping is a matter of all or nothing. Waiving an inheritance in favour of one's children cannot be partial.

Skipping a generation is an estate planning technique that depends entirely on the goodwill of the heir who waives. Grandparents can not impose their wishes on their own children except to the extent that they draw up a will in which they make a bequest for a part of their assets in favour of their grandchildren  but then they must not limit the share that is reserved by law to their own children (forced heirship rules). They can only ensure that their grandchildren inherit the share of their estate they can freely dispose of.



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