Inheritance
Transfer of a deceased person's wealth to their heirs according to legal or testamentary rules.
Full definition
Inheritance refers to all the legal rules that organise the transfer of a deceased person's wealth (the deceased) to their heirs. It may be legal (determined by law) or testamentary (according to the wishes expressed by the deceased).
In Luxembourg, the legal order of inheritance favours descendants (children, grandchildren), then the surviving spouse, ascendants (parents), and finally collateral relatives (brothers, sisters, nephews). The reserved portion protects the children, who cannot be entirely disinherited. The surviving spouse benefits from rights in usufruct or in ownership depending on the situation.
Inheritance entails the payment of inheritance tax, calculated on the net value of the wealth transferred. The rates vary considerably according to the family relationship: from 0% to 5% in the direct line, up to 48% between unrelated persons. Optimisation strategies exist: life insurance, advance gifts, dismemberment of ownership, or a sale via life annuity to reduce the estate's assets.
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Related terms
Gift
Legal act by which a person transfers a property free of charge to another person during their lifetime.
Inheritance Tax
Taxes levied by the State on the transfer of wealth on death, varying according to the family relationship.
Joint Ownership
Situation where several people own the same property together without their shares being physically divided.
Dismemberment of Ownership
Legal division of ownership between usufruct (right of use and income) and bare ownership (ownership without enjoyment).
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