Drafting a will is not limited to organizing the transfer of your estate. It is also an opportunity to take advantage of favourable tax measures while complying with applicable legal frameworks.
In this respect, testamentary provisions generally do not carry significant risks of tax reassessment, as they are excluded from the debate on tax abuse. This is because the testator, by definition, is not the debtor of inheritance taxes. Testamentary freedom thus remains protected.
Depending on the circumstances, certain techniques can significantly reduce inheritance taxes. Here are three examples:
The “Single” Will: Ideal for Optimizing the Estate of a Single Person Without Children
For individuals without children, a will can be used to optimize the distribution of inheritance taxes. In the absence of testamentary provisions, the estate is passed to parents and siblings. However, inheritance tax rates applied between siblings (e.g., in Flanders, ranging from 25% to 55%) are much higher than between parents and children (direct line: between 3% and 27-30%).
To benefit from the lower rates applicable to direct-line relatives, it is recommended to draft a "single-without-children" will so that the estate "ascends" to the parents. If applicable, the estate can later "descend" to siblings, again benefiting from the favourable direct-line rates.
Example: John, a single person without children suffering from an incurable illness, chooses to bequeath his assets to his surviving parents. Upon their death, the parents will pass on the inheritance to John's siblings, taking advantage of the lower direct-line rate.
The "Generation-Skipping" Will for Grandchildren
Subject to respecting the reserved inheritance share, this technique involves bequeathing all or part of one’s estate directly to grandchildren instead of passing it through the intermediate generation.
In addition to being practical (grandchildren often receive the inheritance at a crucial time, such as financing education or buying a home), this approach offers a double fiscal benefit:
- Reduced Inheritance Taxes: By distributing the estate among several grandchildren, individual shares are smaller, which lowers inheritance taxes calculated using progressive rates.
- Avoidance of Double Taxation: By "skipping a generation," the same estate is not subjected to inheritance taxes twice: first during the grandparent-to-parent transfer and then during the parent-to-child transfer.
Example: Hugo and Maria, elderly with three adult children who themselves are parents, may decide to bequeath their assets equally among their seven grandchildren. In doing so, the seven heirs receive equal shares, and as long as their parents renounce their reserved shares, the assets are subject to inheritance taxes only once.
"Duo" Bequests (conjoint legacy): Combining Philanthropy and Tax Advantage
This method involves collaboration between the testator, an association (non-profit or foundation), and the heirs. The testator leaves part of their estate to an association, which assumes responsibility for paying the inheritance taxes of the other heirs.
This technique (still applicable in Brussels and Wallonia; Flanders opted for other solutions since 2021) allows support for a cause while benefiting, on the one hand, from preferential inheritance tax rates for associations (often between 7% and 25%) and, on the other hand, transferring the responsibility for inheritance tax payments to the association. This protects heirs who are less solvent or who receive non-liquid assets (e.g., avoiding the sale of real estate to pay inheritance taxes).
Example: Catherine bequeaths her entire estate to an association assisting the homeless, with the condition that the association makes specific bequests to her heirs, including rental properties, and pays the inheritance taxes for these bequests. The association benefits from a reduced rate, while the heirs do not face taxable advantages from the tax payment.
Note: If the benefit for the association is negligible, the tax authorities could challenge the arrangement as constituting tax abuse or simulation.
Conclusion: Planning for Better Transmission
A well-designed will is a real lever to combine personal intentions with tax optimization. Whether you choose generation-skipping, a single-without-children will, duo bequests, or other testamentary provisions, these strategies often allow you to control the transfer of your estate while limiting tax burdens.
At Vanbelle Law Boutique, our specialists are available to create a tailored tax optimization or estate transfer solution in compliance with current legal provisions. A will can often be part of this plan.
Mirjan Gioni
Senior Associate
.png)
.png)
