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4 benefits of making a living donation

Do you want to know what are the benefits of making a living donation?

4 benefits of making a living donation

Is it better to make a living donation or leave them as an inheritance?

This is a question that can be presented to you at a certain moment in life and the answer is that it depends on each particular case.

Even though inheritance is the most used way, as it is less expensive. It is not always the one that suits you best. Taking into account your situation, it will be preferable to leave an inheritance or donate.

In this post we are going to clarify what you need to know to make the right decision.

What is a donation?

According to the Civil Code we have to:

Art. 618 "The Donation is an act of freedom by which a person freely disposes of one thing in favor of another, who accepts it"

Art. 629 "The donation does not oblige the donor, nor does it produce an effect, but only after acceptance."

In short, it is a "gift"

There is a myth that this "gift" is free, but this is not correct. Rather, it is subject to a series of taxes.

The donation costs both the person who makes it (donor) and the person who receives it (donee).

To specify more we have the following:

- The one who delivers the property will have to pay the Inheritance and Donations Tax. Each community has its own legislation on this tax because it is its competence and not state. In conclusion we have that some of them give the possibility of considerable reductions.

-Only for the case in which the person has agreed to receive an urban real estate by donation, he will have to pay the municipal capital gain, which is a different tax.

- The person who makes the donation has to inform the tax agency in his next income statement, except in the case that it is the habitual residence and the person is over 65 years of age or that what is going to be donated is money.

Next, we are going to explain the benefits of living donation:

1.Foster your loved ones if necessary

Taking into account the current situation, one of the most affected is the young generation. And more specifically we refer to children who cannot become independent.

The donation is a process that you can carry out at the time that you want the most, taking into account the current requirements, on the contrary, you have the option of inheritance for which it is essential to wait for death in order to receive the assets.

In this way you can help your children, so that they can solve their financial problems during your life and not when you are no longer present.

This is the most common reason why donations are made in life, to enjoy the company of those you have favored.

2.Save discussions when distributing the goods

It is very common that fights are generated between the heirs once the owner has passed away.

If you have already decided how you want to distribute the assets you own, to avoid future controversies, we recommend you donate them while you are alive.

3. Impose a term or condition on the donee

The one who makes the donation has the alternative of imposing a term or a condition available as long as the requirements established by law are met.

Have:

- Term or term: it is when the donation is subjected to a future and safe event (for example, turning 18 years old).

- Condition: it is when the event is future and uncertain (for example, having children or obtaining a driving license).

In this case, the donation exists, but its effectiveness depends on the circumstances required by the condition or the term.

4.Reserve the opportunity to recover the donation.

The donor can keep the power to dispose of some of the donated goods or part of it to them.

If the donor dies without making use of this right, the donee will become the full, free and definitive holder of the donation.

It is important to have good tax and legal advice.

Be careful when donating goods to avoid repossession.

There are people who use the donation of a portion of their assets, to prevent their creditors from being able to keep them, in case they could be seized for not being able to meet their debts.

However, this situation is totally inadvisable because the donor would be committing a crime of property lifting.

This crime consists of the attempt to conceal or disappear assets in order to prevent creditors from collecting their debt, voluntarily placing themselves in a situation of insolvency.

Using a donation for this purpose will not only be completely unsuccessful, but in addition to risking being punished with prison terms, it can also lead to criminal problems for the grantees as accomplices in this crime.

If you want to find out whether or not to make a donation regarding your own circumstances, do not hesitate to call Audacia Abogados.

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