A donation is a legal act through which an asset is voluntarily transferred to another person who accepts said transfer.
Therefore, the acceptance of the donee (the person receiving the donation) will be mandatory for the act to be valid.
In short, the donation is what we have always understood as a "gift".
However, even though this "gift" is believed to be free, you should know that it is subject to various taxes.
It is a "gift" that costs money, both to the giver, the donor, and to the recipient, the good:
• Inheritance and Gift Tax. Whoever receives the donation has to pay this tax, it is difficult to specify the figure because it is regulated by each Autonomous Community. In some of them important reductions or bonuses are established.
• Municipal capital gains tax. The person who donates will have to pay it only in the case of donations of an urban property that directly taxes the increase in value that urban land may have.
• The donor must declare the donation in his Income Tax Return, except if it is the habitual residence or the person is over 65 years old or if the donation is money.
Who can receive a living donation?
A living donation can be made to:
• Any natural person without the need for them to be part of the donor's family).
• Any legal entity such as NGOs or foundations.
It is essential that the donee is not legally incapacitated by a judge for the donation.
What are the advantages of making a living donation?
• Help our heirs in case of need.
The donation can be made at the time you want, unlike what happens with a will inheritance, when you have to wait for the person's death to receive the assets.
In this way, we can solve the economic problems of our heirs during our lifetime, without them having to wait until death to receive their inheritance.
This is one of the most frequent reasons why living donations are made.
• Avoid arguments when distributing your assets
It is very common to see fights, discussions and problems between the heirs over who gets to keep each thing, without it being very clear in the inheritance document or some thinking that they deserve more.
That is why it is important that if it is clear how to distribute the assets, it is advisable to make the donation in life to avoid future discussions.
• Impose on the person to whom the donation is given a term or condition
The donor may submit the donation to the fulfillment of a term or to a condition, provided that the requirements of the law are met.
• Term or term: when the donation is submitted to a future and safe event.
• Condition: when the event is future and uncertain.
In this case, the donation exists, but its effectiveness is subject to compliance with the circumstances required by the term or condition.
• Reserve the right to dispose of donated goods.
In this case, the donor may reserve the right to have at his disposal some of the donated goods or some amount charged to them. It is important to know that the power to dispose of all the donated goods cannot be reserved, only some of them.
If the donor dies without making use of this right, the person who receives the property will become the full, free and definitive owner of the donation.
In no case, the donor, who is no longer the owner, can recover the property of the donated, he can only dispose of it in favor of a third party.
• What is donated can return to the property of the donor
This is known as a donation reversal agreement.
The donor may, for any case and circumstance, establish the right to reacquire what has been donated, that is, recover ownership of it, which will take place when the stipulated term ends or when the established condition is met.
• The donation with reservation of usufruct
The donor may reserve the usufruct of the donated property and transfer bare ownership to the other person. The donee may not sell, encumber, mortgage, or dispose of the property object of the donation until the death of the donor.
Full ownership is consolidated in the donee upon the death of the donor or if the donor renounces the usufruct.
This is common in parents who want to donate a home to their children, but the parents reserve the lifetime usufruct of it. This will allow the parents to live in it until their death or even rent it and make the income their own. But, in no case, sell it.
• Revocation of the donation
Our Civil Code contemplates the following causes for which a donation may be revoked:
-Supervenience of children: The donor without children or descendants may revoke the donation if, after making it, he has a child.
- Failure to comply with charges: When the donee voluntarily fails to comply with any of the conditions imposed by the donor.
- Due to ingratitude in the following cases:
o If the recipient of the donation commits a crime against the person, honor or property of the donor.
o If the person receiving the donation accuses the person giving it of any of the crimes that give rise to ex officio proceedings or public accusation (theft, rape, fraud...), even if he proves it.
If any of these causes occur, the donor may exercise the corresponding action in the appropriate judicial procedure.
• There is no obligation to pay the donor's debts.
Unlike the inheritance if the deceased person had debts, you do not inherit said debts when making the act of donation. But you have to take into account the tax costs involved in being a donee through good legal advice.
You should know that you have to be careful when donating goods to avoid embargoes. From what we understand there are people who use the donation of part of their assets to prevent their creditors from collecting their debts.
In any case, this situation is totally inadvisable since in this case the donor would be committing a crime of concealment of assets.
This crime consists of the attempt to conceal or disappear assets with the aim of preventing creditors from collecting their debt, voluntarily placing themselves in a situation of insolvency.
It should be said that making donations for this purpose can lead to prison sentences, it can also lead to criminal problems for the people who receive the good since they act as accomplices.
Now that you know all the advantages of donation, we inform you that many people decide between an inheritance or a living donation, depending on which option represents paying a lower amount of taxes.
Therefore, if you are a donee or donor and you want legal advice, do not hesitate to contact Audacia Abogados and we will be happy to advise you, call us.