What should be done with the inheritance: Donate during life or make succession later?
When it comes to thinking about what to do with one’s own assets. The elderly are hesitant about how to plan their inheritance: These are the pros and cons of the two possible ways that the law currently authorizes.
When planning inheritance, there are many things that must be taken into consideration and the first of these is the way in which the person will transmit their personal wealth to the heirs: The most common ways are by succession or a living gift.
Although the living donation is simple. The succession process is not so simple and has some diversifications that must also be taken into account. An inheritance by succession can be without a will or testamentary.
In the case of a succession without a will, it is appropriate that the assets pass to the forced heirs. Who are the children in the first place, spouse with respect to the own assets, and there are no children the parents in concurrence with the spouse.
On the other hand, if the succession is testamentary. The person can freely dispose of a part of his or her estate. If there are children, what he can freely dispose of is the third part of the patrimony, and if there are living parents. Or if there is a spouse, he can dispose of half of his patrimony. At the same time, in the event that there is a person who is a forced heir with a disability, a third more of the estate can be disposed of. Which would have corresponded to the other heirs in favor of that person with a disability.
WHAT’S BETTER: THE LEGAL POINT OF VIEW
Donations presented a very serious drawback and that was that the title from a donation was an imperfect title. An observable title. Which lacked legal certainty and this affected both the possibility of obtaining a mortgage on that property. And the possibility that a buyer decided to make the operation. Since there was always a risk that an eventually displaced heir would make a claim.
However, this problem was solved with the enactment of a law last year and, therefore. Currently the titles coming from a donation are as valid as those from a purchase and sale.
So, the decision to donate the estate in relation to the possibility of a succession implies avoiding the costs of lawyers and court fees and the time it takes to obtain a succession.
Although the problem of titles by gift was resolved. There are still some things that must be taken into account when making the decision of which way to choose for the inheritance.
Despite the fact that it takes longer, an inheritance can be better.
Sometimes the time required by a succession allows the heirs to settle into their new situation and not go out compulsively to dispose of the assets received.
Let’s say that when someone donates their patrimony, even if they do so witha reservation of usufruct. From the moment of their death, from the next day. The heirs are in a position to dispose of that patrimony without any kind of control.
Sometimes the heirs are very affected by the situation of the death or do not have the necessary maturity to do business. From that point of view. Probate is an indirect form of control because until it’s finished. A person is not going to be able to sell the assets.
In the case of donations, from the moment the donation is made, the heirs become the owners of the domain. That is, they are the ones who appear in the land registry and, in this way. By appearing in the property registry, they automatically respond with their assets for the debts they may generate, paradoxically. Leaving the patrimony in the hands of the elderly. When the elderly often do not have businesses in their charge and do not take certain types of risks, is a way of protecting that patrimony.
From the moment a donation is made, even if it is with reservation of usufruct. Certain patrimonial risks are run, such as the desire to sell the property.
If the donation does not have all the clauses that provide for this type of situation. It could happen that the heirs say ‘no, you have your usufruct here in this property. But we are not going to collaborate so that this property is sold and another one is acquired. Even if it is in our name, because we do not have to incur notary fees’. So, in a way, this consolidation of the patrimony in the head of the donees can go against the freedom of a person.
WHAT IS BEST FOR THE CHILDREN WHEN IT COMES TO PROPERTY
Santiago Magnin is a specialist in the real estate sector who, on his TikTok account: @santivende. Is dedicated to helping his followers sell properties. When asked what was more convenient. Whether to make a succession or a living donation, the tiktoker decided to answer from the point of view of the children.
He said: “If I were your son, I would tell you that it is not convenient for you to make a donation to me in life because you cancel two very large possibilities that I have at my disposal by not having properties, not even a small percentage in condominium with my brothers in a small property.”
According to the influencer, in the first place, with the donation. The possibility of the son being able to take out a mortgage loan and be able to buy a property by himself is cancelled. Since in Argentina “mortgage loans in Argentina, in general. Are for a single home, some even for a first home only,” he explained.
On the other hand, the expert said, “when one buys a property and sells that property. Which is a single property of permanent occupation. It has a total exemption from Income Tax and also a total exemption from Property Transfer Tax, before, one replaces the other.”
“So, two big disadvantages of a living donation. That said, if your child sees that they are never going to buy a property. It is good to make a donation during their lifetime because all the expenses of a succession are avoided,” concluded the specialist.