Bill proposing that inheritance law be reformed: what can we expect?

Belgian inheritance law, which is still largely derived from the 1804 Napoleonic Code, is ripe for a comprehensive overhaul. And so the demand for a new and modernised law of inheritance that is more in equilibrium with the needs of contemporary society has existed for quite some time. On 25 January 2017 a new bill was introduced in parliament, which entails amending the Civil Code insofar as inheritances and gifts are concerned as well as the amendment of a range of other relevant provisions. This bill tackles the problems that the practice is faced with as a result of the current form of inheritance law, using four major themes: amending the rules for a reserve for compulsory heirs under the law of inheritance, amending the rules for gifts that must be brought back into the estate, relaxing the current prohibition on agreements concerning the estates of persons not yet deceased and adapting the rules on the division of an estate. 

1. Inheritance agreements

In the current inheritance law there is a prohibition on concluding agreements for the estates of persons not yet deceased. There are however a number of legal exceptions to this ban, such as the so-called “Valkeniers clause” (which allows spouses to waive their right of inheritance to each other’s estates in the marriage contract if they have children from a previous relationship).The bill aims to relax this prohibition and tries to tackle the concern many parents are faced with when arranging their estates, both for themselves and in consultation with future beneficiaries. The bill does this by introducing the concept of the ‘general inheritance agreement’, which gives parents the opportunity to reach agreements with their children on the allocation and division of their estates. This gives the parents peace of mind and reduces the chance of arguments erupting between the children when their parents die.Aside from this ‘general inheritance agreement’, the bill likewise calls for the introduction of a number of ‘punctual inheritance agreements’, which provide for the opportunity, among other things, to conclude an inheritance agreement on the value of gifted items in respect of gifts that must be brought back into the estate, compulsory heirs relinquishing an abatement claim, or permission by the compulsory heirs for a donee to dispose of goods gifted to him or her.

2. The compulsory reserve under the law of inheritance


The bill includes another ‘revolutionary’ aspect – an overhaul of the portion of an inheritance that must be reserved for children under the inheritance law. This general reserve for offspring shall be reduced to half of the estate, with the direct consequence that the available part of the estate will also be half. At present the size of the available portion is still dependent on the number of children – if there is one child the available portion is half, if there are two children it is a third and for three or more children the available portion is just one quarter of the estate. So it is primarily the parents of two or more children that will henceforth have more options when it comes to distributing their estates. Bearing in mind specific family situations, the parents can settle their estates more according to their wishes. Of primary concern here are families with step-children, children requiring special care, protection for a partner to whom that person is not married, etc.

The ‘shrinking’ of that reserve set aside for the children is to some extent offset in the bill by means of reduced burden on the reserve as a result of the right of usufruct of the spouse living the longest. While in theory the longest-living spouse retains the right of usufruct to the entire estate, if that person is only entitled to the usufruct to a part of the estate, then it is preferentially charged to the available portion.

The bill further discusses the repeal of the reserve set aside for parents. At present a childless testator whose parents are still alive cannot choose to whom his or her assets will be transferred, because a reserve of one quarter of the estate is set aside for each parent. This reserve would be repealed under the new law and replaced by a claim for maintenance payable out of the childless testator’s estate. A parent can lodge a claim for maintenance if he or she is in need thereof at the time of the child’s death and receive it in the form of an annuity or in capital.

The children – the compulsory heirs – are entitled to a ‘reserve in kind’ at present. Should the reserved portion of the estate for the children be breached because the testator made too many gifts during his or her lifetime, the children can demand that those goods gifted in kind be returned to the estate (= abatement). It comes as no surprise that this situation creates a great deal of uncertainty, especially for the donees of donations that are suddenly required to surrender the goods they received. This is why that reserve in kind is to be converted into a ‘reserve in value’. This means that the compulsory heirs will only be able to demand the countervalue of the donations that have depleted their reserve, but not the gifted goods themselves.

The valuation of the donations for the purpose of calculating the notional total value of an estate (for the purpose of the abatement of donations, where applicable) will, under the bill, henceforth be based on the intrinsic value of the gifts on the day upon which they were donated, indexed until the date of the testator’s death. At present this valuation is conducted on the date of the testator’s death. By valuing donations for the purpose of calculating the notional total value of an estate at the time of the donation, admittedly with indexation, a uniformity is created in respect of valuing donations for the purpose of determining their part of the estate (gifts brought in – see below).

3. Gifts brought in


The mechanism for gifts received before the testator’s death that are considered as part of the estate (gifts brought in) is likewise the subject of a comprehensive overhaul. Gifts brought in are gifts (or their countervalue) that a legal heir received while the testator was alive or through a testament and that are brought back into the estate as a whole at the time of the testator’s death. By doing so, the items brought in are divided between all beneficiaries, guaranteeing their equality. This is because it is presumed that the gifts to the legal heir were made by the testator as an advance payment on their share in the estate, as it were. In other words, the testator was merely of the intention of awarding an advance to the donee of what he or she would receive at the time of the liquidation and distribution of the estate. That is why the donee returns this gift – or its countervalue – to the estate, after which it shall be divided up among the heirs.

At present this bringing in of gifts is performed according to whether moveable or immoveable assets are involved. As a rule, immoveable assets are brought in in kind and according to their value on the date the estate is distributed, while moveable goods are dealt with by means of a reduced share (in terms of value) and according to the value at the time of being donated. In practice, this distinction means that many unreasonable and unfair situations are created. The bill deals with this by determining that all items, whether moveable or immoveable, shall be brought in in the same manner – in terms of their value, irrespective of their nature, and on the basis of the intrinsic value of the gifted items on the date they are donated, indexed until the date of the testator’s death. Both the abatement and the bringing in of donations will henceforth be performed in a uniform manner.  

4. Apportioning debts


Finally, the bill also provides for a clearer arrangement for apportioning debts. The Civil Code presently only dictates the principle for bringing in debts, but says nothing of the methods. This is why a new article 821 of the Civil Code has been proposed, which includes a new arrangement for apportioning debts.

The further course of the relationship between the UK, the EU and the EEA
What impact will Brexit have on your corporate income tax?
For the time being, the United Kingdom (UK) is still part of the European Union (EU) and the European Economic Area (EEA). The UK has since been given until 31 October 2019 at the latest to implement Brexit. This means that cross-border transactions with the UK continue to fall within the scope of EU directives. However, after Brexit, the UK will no longer be able to rely on these directives. This
Less strict circular for catering sector
New circular regarding the VAT rate for restaurant and catering services
On 1 January 2010, the VAT rate for restaurant and catering services was reduced to 12%. This rate only applies to food. Drinks (including non-alcoholic beverages and coffee and tea) are still subject to the standard VAT rate of 21%. On 23 December 2009, the administration published an explanatory note in which it detailed how an overall price for a menu (including drinks) needed to
From now on, also 'high' fixed cost deductions for self-employed persons
Personal income tax return form AY 2019: several new features explained
From now on, also 'high' fixed cost deductions for self-employed and other changes  The new personal income tax return form for assessment year 2019 was published on 7 April, the starting shot for the annual tax return race. For the Flemish tax return, "only" 6 codes have been added, and for the Walloon and Brussels tax returns, "only"
Does the new definition of a company have any consequences for your organisation?
Broader requirements for registration with the CBE - clarification for unincorporated companies
In a previous article, we explained that the introduction of a definition of 'company' in the new Companies and Associations Code (CAC) also affects the registration with the CBE (Crossroads Bank for Enterprises). In this article, we will discuss in more detail the registration obligation for unincorporated companies.  Consequences of the broader definition of a company  With the new
Noticeable impact on tax matters
Impact of Brexit on registration and inheritance tax
The tension in the United Kingdom is palpable. In the meantime, the initial date of Brexit, 29 March 2019, has been delayed. Depending on whether an agreement will be reached or not on 29 March, UK's departure date will be moved to 12 April 2019 in case of a hard Brexit (no deal) and to 22 May 2019 in case of a soft Brexit (deal). It is clear that Brexit will have an impact on tax matters, bo
An easing-up for most SMEs
New interest deduction restriction mostly offers opportunities
As part of the reforms to corporation tax in late 2017, a new interest deduction restriction was also introduced. This is part of the second phase of the reform, meaning that it applies in principle to financial years starting on or after 1 January 2019 (assessment year 2020). The new interest deduction restriction was introduced in the transposition of the European Anti-Tax Avoidance Directive (A
Some important dates highlighted
The new Companies and Associations Code
The new company and association law had already been announced for some time, and it was approved by the Chamber on 28 February 2019. Below we give a brief explanation of some of the important dates associated with the entry into force of this new legislation.   Introduction of the new legislation  The law introducing the Companies' Code enters into force on 1 May 2019 and repea
The new rules for VAT processing of vouchers
The wonderful world of VAT and vouchers
Vouchers are a very popular marketing tool. There are various types of vouchers: discount vouchers issued by a manufacturer, redeemable at any sales outlet in Belgium, discount coupons issued free of charge by retailers, vouchers where you can get a newly launched article free of charge, gift vouchers that can be redeemed for a whole range of products or services, electronic vouchers, etc. Are yo
A showpiece, or rather a sticking plaster for a broken arm?
The Belgian fiscal consolidation regime
The general intention with the introduction of a fiscal consolidation regime was clear, namely to put the Belgian tax system back in a positive light. After all, many of our neighbouring countries have had a system of fiscal consolidation in place for many years, and Belgium consequently scored badly on this point when international groups were looking to choose an investment location. The ques
The long-term lease revival
Superficies as stealth usufruct?
A noteworthy judgement was recently handed down by the Court of Appeal of Brussels regarding the taxation of overly cheap accession in the case of superficies (23 January 2019). In the past, a number of rulings had already been made on this subject (see, inter alia, Court in Ghent of 31 October 2017). The tax authorities are clearly keen to see the end of the right of superficies, and the two judg

Subscribe to our newsletter