Giving by hand: a generous gesture for the holidays
The festive season is a time of warmth and sharing, and an ideal opportunity to strengthen family ties through meaningful gestures. Among these gestures, the gift of money by hand stands out as a particularly generous expression of affection towards the younger generations of the family - children and grandchildren. This type of gift can have a profound and lasting impact on their future, particularly by helping them to take crucial steps such as buying their first home.
A manual gift, simplified by its informal nature (no need for a notarial deed), enables a sum of money to be passed on directly, often in the form of cheques, cash or bank transfers. This financial gift can prove decisive in major life projects. For example, the down payment required to purchase a property can often be an insurmountable obstacle for young adults. By contributing in this way, you are putting your own savings to work to help your descendants on the threshold of financial and property independence.
Today, the legal framework for gifts by hand is attractive, with significant tax deductions. Every fifteen years, sums of up to €100,000 can be passed on free of gift tax, for sums paid to a child, and €31,865 for grandchildren. This encourages many grandparents and parents to choose this option to optimize their inheritance while helping their loved ones in practical ways.
Beyond the financial aspect, a gift by hand can also be seen as a rite of passage, a way of recognizing the maturity and autonomy of the young adults in the family. It's a vote of confidence, giving them the means to build their lives on a solid foundation. The holidays, with their atmosphere of generosity and gratitude, are the ideal time to announce such initiatives. It's a time to bring the family together, share memories and plans, and strengthen intergenerational ties with goodwill and hope for the future.
Giving by hand at the holidays is not just a financial gift. It's an investment in the future of young people, a demonstration of support and trust that goes far beyond mere monetary value. By choosing to help your children and grandchildren realize their dreams, you offer them resources to navigate their own lives, enriching your family legacy across generations.
Temporary usufruct: a wise strategy for early inheritance
Modern wealth management offers a multitude of tools for passing on assets while reducing tax burdens, and supporting beneficiaries in their life projects. Among these tools, the temporary gift of usufruct is particularly relevant for parents wishing to help their children establish themselves in adult life.
The principle of temporary usufruct
Temporary usufruct enables the donor to transfer, for a limited period, the rights of use and the fruits of a property (rental income, interest, dividends) to one or more beneficiaries. At the end of this period, which is defined in advance and generally ranges from a few years to several decades, the usufruct automatically joins the bare ownership, restoring full ownership of the original property to the donor without the need for additional legal or tax intervention.
This mechanism is often used for real estate and investment portfolios. Parents can, for example, allow their children to benefit from the rental income from an apartment or stock market shares, without transferring full ownership. This can be very useful for financing higher education, starting a business or the purchase of a principal residence by the children.
Estate planning advantages
One of the major attractions of the temporary gift of usufruct lies in its tax benefits. By separating usufruct and bare ownership, the value of each right is lower than that of full ownership, resulting in a significant reduction in gift tax payable. What's more, at the end of the usufruct period, full ownership is reunited without additional duties, which is advantageous from a tax point of view.
Pitfalls to avoid and best practices
However, caution is advised when setting up a temporary usufruct gift. The tax authorities can be vigilant about the use of this arrangement, checking in particular that it is not intended solely for tax purposes, but pursues a legitimate objective of family support or asset management. It is therefore advisable to document the reasons for and objectives of the gift, preferably with the help of a wealth advisor or notary.
In addition, clear communication with beneficiaries is essential to ensure that everyone understands the terms and implications of the gift, particularly as regards sales restrictions and tax responsibilities during the usufruct period.
Facilitating access to property for young adults through gifting
The acquisition of property represents a major milestone in an individual's life, often symbolizing financial independence and stability. However, in the current economic climate, characterized by rising property prices and stringent lending conditions, many young adults are finding this goal increasingly difficult to achieve. In the face of these challenges, parents and grandparents can play a crucial role in easing this transition through the gift of real estate.
Economic context and challenges for young adults
Today's young people face unprecedented barriers to entering the real estate market. High prices, combined with stringent down-payment requirements for mortgages, make access to home ownership particularly challenging. In this context, family intervention through a donation can be a godsend, turning a distant dream into a tangible reality.
The donation of real estate is a form of property transfer from one person (the donor) to another (the donee), without any financial consideration on the part of the donee. This generous gesture can considerably lighten the financial burden of beneficiaries, and provide them with the leverage they need to acquire their first home.
Tax benefits and conditions
Today, there are still favorable tax conditions for real estate donations, notably through substantial reductions in gift tax. Every 15 years, a parent can give a child up to 100,000 euros free of gift tax. This legal framework thus encourages intergenerational donations, facilitating access to property ownership for young adults.
There are several options for making a donation. It can be made directly, where the property is completely transferred from the donor to the donee, or in the form of a dismemberment of ownership, where the donor can retain the usufruct (i.e. the use and benefits of the property) until his or her death.
It is crucial that this approach be legally regulated, and that a deed of gift be drawn up by a notary. This ensures that the donation complies with current legislation, secures the transaction for all parties involved, and ensures that the property is registered.
Social and family impact
Beyond the material benefits, the gift of real estate also has a strong social and family impact. It is an act of trust and support that strengthens family ties, enabling young people to feel supported in their life projects by their family. It also establishes a tradition of intergenerational solidarity that can be perpetuated.