To support the work of Let Us Change and to guarantee a better future for hundreds of deprived families and homeless children in Ethiopia, you can partially leave your heritage to Let Us Change. An interesting formula for this is the dual legac, with Let Us Change taking the inheritance taxes into account. Together we determine the destination of your gift.
How does the technique of the dual legacy work?
In a duo legacy, the testator leaves part of his possessions to a charity and another part to his heirs. The technique can be fiscally interesting if the testator wants to leave something to someone who has to pay high inheritance tax.
To understand how the duo legacy works, you first need to know a few things about inheritance rights. They are built progressively: the greater the capacity left, the higher the rate. In addition, the relationship between the deceased and the heir also plays a role. Direct heirs, such as spouses or children, pay less inheritance rights than, for example, brothers and sisters. Far family or heirs who have no family relationship with the deceased pay the most. A friend must therefore give a big bite out of the inheritance to the tax authorities. Unless the deceased transfers part of his assets to a good cause, which is obliged to pay the inheritance taxes of the boyfriend or girlfriend. That is the essence of the duo legacy.
An heir without family ties with the deceased pays 45 per cent inheritance tax on the first tranche of an inheritance to 75,000 euros, 55 per cent on the tranche from 75,000 to 125,000 and 65 per cent on the tranche above 125,000. If a man without a family leaves a capital of 500,000 euros to his best friend, he will therefore have 195,000 euros left. The deceased had better left his friend 250.000 euro and the other 250.000 euro to the charity with the assignment to pay the inheritance rights of the friend. Let’s make the calculation. The friend pays no inheritance tax in this case and reserves 250,000 euros. That is 55,000 euros more than in the first example. The charity pays the following inheritance tax on the friend’s 250,000 euros: 45 percent inheritance rights on the first bracket of 75,000 euros, 55 percent on the bracket from 75,000 euros to 125,000 euros and 65 percent on the bracket from 125,000 euros to 250,000 euros, that is 142,500 euros. The organization also has to pay taxes on the 250,000 euros that it received. In Flanders, the rate for a non-profit organization is 8.8 percent. This gives 22,000 euros at 250,000 euros. The charity therefore pays a total of 164,500 euros to the tax authorities and keeps 85,500 euros. In short: everyone is doing well.
When is a duo legacy interesting?
A duo legacy is rarely interesting if your own children inherit – then it must be about sums of over 500,000 euros per child – but they are if the inheritance goes to brothers and sisters, and certainly if they go to cousins or strangers. Both parties win.
Are there other tariffs for non-profit organizations in Wallonia and Brussels?
The Walloon region applies a comparable rate of 7 percent, but in the Brussels-Capital Region it is 25 percent. Only non-profit associations that are allowed to issue tax certificates pay “only” 12.5 percent, so in Brussels the duo legacy is less interesting for tax purposes.
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