This post is a continuation of Part 1 on What is Conveyancing a Business by Shared Donation. Lately, we have gone through
Step 1: Having the company evaluated
Step 2: Choosing between temporary or lifetime dismemberment.
We will now continue from step 2 to further cover
Step 3: Don’t harm other heirs in reserve
Step 4: Consult a notary.
Step 2: Choosing between a temporary or lifetime dismembermentOpt for lifetime dismemberment
When a dismemberment is for life, the bare owner will only recover the usufruct on the usufructuary’s death. This solution implies the head of the business’s death so that his shares are transferred to the usufructuary.
Note: even if he chooses life dismemberment, the bare owner has the option of donating his bare ownership to his usufructuary. However, this donation will give rise to additional donation rights, making the usufructuary lose interest in the transaction.
For example, a father and a mother own a company valued at 1 million dollars. They make a donation-sharing the usufruct to one of their children for $400,000. The donation rights will, therefore, only apply to $400,000. A few years later, the parents decide to donate their bare property, now valued at $700,000. In the end, the donation rights will have been calculated at $1,100,000.
Step 3. Do not harm the other heirs who have the right to inherit
All of the heirs who are reserving heirs of the head of the company have a right to the shares held by the head of the company. If the manager has to make a shared donation to one of his children, one of these two schemes must take place:
– the child receiving the bare ownership of the shares must pay compensation to his brothers and sisters;
– the corporate donor must make compensatory gifts to his other children.
Good to know: it is also possible to compensate children afterwards, especially at the time of succession. However, this configuration is complex and can be entrusted to a specialist to avoid imbalance in the division. To this end, Felix A Vitiello is a reputed law firm specializing in conveyancing for individuals, families and businesses.
Adopt the payment of compensation to brothers and sisters
As seen above, the child receiving the shares’ bare ownership must pay a balance to his brothers and sisters. However, the donor entrepreneur cannot pay it himself, as the bare-owner child owes it.
Prefer compensatory donations
The principle of a shared gift is to pass on an estate equitably.
Through the same notarial deed, the donating company director can make movable or immovable donations to the other children.
Step 4: Consult a law firm
The shared donation must be a notarial deed. The donating company director must consult a notary, whose task will be to:
– make sure that the company has not been undervalued or overvalued;
– ensure that all the rightful heirs will receive an equitable share;
– draw up the deeds of donation, division and dismemberment.
Finally, as the saying goes: prevention is better than cure! Timely legal advice can prevent a situation from getting worse. When you think there is no solution, Felix A Vitiello is here to serve you in the field of Family Law, Conveyancing, Criminal Law, Power of Attorney, Wills, Trusts and Estate Litigation, Probate, Business Transactions & Leasing, and Commercial Law.
Thank you for staying posted for our new blog posts. Hope the posts from Part 1 till here would be of any help to you. Remember to leave your comments below and share these posts with your friends.
One thought on “What is Conveyancing a Business by Shared Donation (Part 2)”
Pingback: What is Conveyancing a Business by Shared Donation (Part 1) | Law blog online