The two-stage making (also called "fideï-commis de residuo" or "making over hand") can be used for several purposes.
Firstly, to ensure that if someone has inherited what he has inherited on his death does not automatically go to his heirs. Second, it can be a means of saving inheritance tax. This is because whatever is obtained under the two-step making arrangement is deemed to have been obtained from the person who made the two-step making arrangement and not from the heir to whom it was imposed.
There may be situations in which you would not only want to determine what happens to your own estate, but also what happens if an heir has inherited from you and he subsequently dies. For example, because you do not want what is then left of your estate to go to your own ex-partner or the ex-partner of that heir, or because you really want to keep the assets in your own family. You then decide what happens to the assets that your heir has left from your estate upon his death and to whom it belongs.
In a number of cases, two-step devolution can also be used to save on inheritance tax. Particularly in cases where there are unmarried children who have no descendants, two-stage making is a particularly good tool to allow assets acquired from parents to be inherited between siblings in a lower rate group. The desire to avoid paying inheritance tax on the first death because the money is tied up in the property can also be a reason to work with a two-stage creation.
For more information on the possibilities of a two-stage creation, please contact us. We will be happy to advise you.
