CFA CFA Level 3 can forced hiership challenge gifts?

can forced hiership challenge gifts?

  • This topic has 8 replies, 3 voices, and was last updated Oct-17 by vincentt.
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    • RaviVooda
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      @alta12, @‌vincentt
      I remember probate can challenge gifts

    • Alta12
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      @ravivooda Yes, forced heirship has a ‘clawback’ provision for estranged or conceived out of marriage children.

    • RaviVooda
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      @alta12,@vincentt
      I have just read in text book.

      To avoid probate we can use – insurance, trust, partnership in firm, retirement plans.

      To avoid forced hiership we can use – insurance, gifts during lifetime, purchasing assets in country where this rule does not apply.

      So gifts can’t be challenged by forced hiership rule. Only probate can.

      Page 317 answers fOr 1 and 2

    • Alta12
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      @ravivooda they can attempt to gift it but the clawback provision will clawback lifetime gifts into estate before calculating the children’s share. CFAI Reading 12 p. 276 last paragraph.

    • vincentt
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      To challenge a forced hiership, is only after the person’s death. Things get messy when there’s country’s law overriding the will. So when a person dies, at that point his assets will be calculated for the probate and so on.

      Gift is different, it’s before his death so it can’t be challenged (unless during the period when the gifter was hospitalised and gift a portion to another person, might get challenged, don’t hv to know in CFA) just like how gift can avoid estate tax etc.

    • RaviVooda
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      @alta12, thanks. Missed this one

    • Alta12
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      Solution 1B p. 317 also states gifting strategies may not work due to claw back provision (last sentence under bullet point).

    • RaviVooda
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      @Vincentt, as per our text book, if there are clawback provision it can

      To challenge a forced hiership, is only after the person’s death. Things get messy when there’s country’s law overriding the will. So when a person dies, at that point his assets will be calculated for the probate and so on.

      Gift is different, it’s before his death so it can’t be challenged (unless during the period when the gifter was hospitalised and gift a portion to another person, might get challenged, don’t hv to know in CFA) just like how gift can avoid estate tax etc.

    • vincentt
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      @RaviVooda‌ but if the gifter gave the asset many years before, I’m not sure if the clawback rules would apply. I think it’s only applicable if the gift was given to avoid forced heirship, otherwise i don’t think it could. But i guess the syllabus just simplifies it, so best stick to it.

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