Can You Make a Gift Repayable Upon the Recipient's Death

[BlueFrog]

Hi,

Can anyone help with this?
Seems that there is pretty standard practice in Belgium to include a return clause when making an estate cash gift.
The return clause is for the rare case when the donee dies before the donor and does not have any descendents so that the gift money can be recovered without paying estate taxes.

I am trying to figure out if I can even use such a cash gift for I would not want my grieving wife to have to deal with being collected upon in the case of my death.


a) Is such a gift contract with a return clause legal and enforceable in the US?
b) If the cash gift was spent (like used for a vacation instead of buying stock), does it still need to be restituted?
c) If the cash generated interest or gains, do those gains need to also be restituted with the original cash gift amount.

[Foster_Foster]

A gift is a gift, not a loan, and it's not clear what you're talking about with regard to paying estate taxes on a pre-death gift. Once you give away money or anything else, it's no longer yours and wouldn't be part of your estate.

What is more common is that someone who gives a relative a loan and the two decide that the loan may be addressed by way of being interpreted as an advance on the borrower's inheritance if it isn't repaid before the lender dies.

The rest of your questions are just ... strange. Again, we're talking about a gift, no?

[BlueFrog]

Thanks for your reply. It is a gift for there is no repayment stipulation. It is more like a gift with a lien attached.

The Belgian Civil Code has this article 951:
"A donor may stipulate the right of return of things given in the event of the predecease of the donee alone or of the donee and his descendants. This right may be stipulated only for the benefit of the donor alone."

They have some really strange estate rules in Europe... Wondering if this one is applicable or enforceable in the US?

[Dogmatique]

Are YOU in the US?

If you are, why is Belgian law relevant?

If you are not, why is US law relevant?

[BlueFrog]

Good point, yes that seems to be the question I am really asking ("why is Belgian law relevant?").

I live in the US but signed a Belgian donation acceptance act in Belgium.

I know that some countries have reciprocity treaties with the US like for taxes.

So you are saying that the Belgian court might not have jurisdiction to enforce this law in the US?

[Foster_Foster]

You might want to re-read your posts with a stranger's eye, 'cause you're presuming that someone knows what it is to "[have] signed a Belgian donation acceptance act in Belgium."

You've given folks absolutely no context for your situation. I can see no vehicle by which a Belgian court wouldn't be able to control what happens to a U.S. estate if you have a will saying that so-and-so has to give back a gift. If you have assets in Belgium, that would be an ancillary probate issue to be dealt with under Belgian law.

[aaron]

I can see no vehicle by which a Belgian court wouldn't be able to control what happens to a U.S. estate if you have a will saying that so-and-so has to give back a gift....

I believe you meant "would".

[BlueFrog]

Agree about being unclear. Yes, I was trying to avoid going into too much detail with the crazy Belgian stuff.

So the donor lives in Belgium and the donee lives in the US. The donation occured in Belgium.
A Belgian donation act is just a notarized document that states the gift amount and the conditions. In this case, the condition that concerned me was the return clause.

At least in Belgium (and France), if you die, you can't control where all your estate goes. Part will go to your wife but part will go to your kids or back to your family (like siblings). You can't exclude anyone, they all get equal parts. If my estate goes back to the family in Belgium, they will have to pay hefty estate taxes on it so gifts often have a return clause so that they can be recovered by the donor without paying estate taxes and then the donor is free to regift it at a lower gift tax rate (3%) to the other surviving siblings. This is a trick to legally avoid some estate taxes.
However, this clause makes little sense in the US for if I die, it all goes to my wife so nothing is returned to Belgium so wanted to avoid seing this clause used improperly against my wife.

Yes, agree that if I had assets in Europe, the Belgian courts could probably grab them with that clause but not in the US.

Thanks guys for your help. I now just need to confirm this with a laywer specialized in this.