“It’s a pointless thing”. How joint wills and personal funds work. Comments by Anton Kabakov in an article for RBC Pro.
A joint will is a raw format, an inheritance fund is overly complicated, and a personal fund is the preferred choice of government officials. RBC Pro has interviewed lawyers to gain insight into how new instruments of inheritance law really work in Russia.
Such legal constructs as joint wills, inheritance funds, personal funds, and inheritance contracts, came into existence in Russian legislation in 2022 when wealthy Russian testators began experiencing problems using similar instruments in the West. The initial test run revealed that some of them proved extremely popular, while others were strongly advised against.
“We recently provided legal support to a client for the structuring of the purchase of a high-budget residential property in France. We focused not only on purchasing the property, but also on building an effective ownership model. This model was designed to reduce tax costs, simplify the inheritance process, and minimize the administrative burden of enjoying the property,” commented Anton Kabakov, Partner, Forte Tax & Law. “We proposed setting up a special non-profit entity in France as a basis for the structure, in whose name the property was registered. The key element of the solution was dismemberment of ownership (démembrement de propriété). It essentially means the separation of economic interest from legal title: bare ownership (nue-propriété) passes to future heirs while the current owner retains the right to use and enjoy the property (usufruit). This mechanism, which is rooted in Roman law, makes it possible to effectively plan the transfer of property without changing the title owner, to minimize the tax base for property wealth tax (impôt sur la fortune immobilière), and in some cases, to completely avoid inheritance tax, which can be as high as 45% in France. The currency restrictions and sanctions were particularly challenging: it was necessary to circumvent the prohibitions on foreign currency loans between residents and non-residents, restrictions on participation in foreign entities, and to comply with applicable Russian currency regulation laws.”
Read the full article here on the RBC Pro website (in Russian).