Page 19 - Bespoke EPG 2017 Digital

Bequeathing a loan account or debt due

■■ Where a loan or debt which is due to the testator, is bequeathed back to a
beneficiary, and such loan or debt is included as property in the Estate Duty
calculation of the testator, such bequest will not be regarded as discharge of
debt and will not be subject to capital gains tax.

■■ Such a bequest of a loan or debt which is due to the testator is therefore
an effective way of getting rid of an unwanted debt without triggering
additional tax

Usufruct and bare dominium

■■ A usufruct is created when a testator gives a right to the income or use of
a specific asset to a person (usufructury), and the right of ownership (bare
dominium) to another.

■■ During his lifetime, the usufructury must take good care of the asset and cannot
sell or encumber it in any way without the bare dominium holder’s consent.

■■ The holder of the bare dominium is the eventual owner of the property,
but his rights are limited by the usufruct. After the usufruct has ended, he
receives full title.

■■ Upon the bare dominium holder’s death, his interests are transmittable to his
intestate /testate heirs.

■■ The method of valuing the usufruct differs between donations tax and
estate duty. The death of the holder of the usufruct will however not trigger
additional capital gains tax.

Fideicommissum

■■ This is where one person inherits an asset on the condition that it must pass to
someone else at a certain future date or the occurrence of a specified event.

■■ The purpose of this mechanism is to enable an estate planner to retain
assets within the family circle for successive generations.

■■ There are statutory limitations on the length of time a fideicommissum can be
used – for example with immovable property, it is limited to two successive
generations.

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