This feature was originally published on November 29, 2019.
You have an estate, large or small. You’re worried about the fate of your estate for various reasons: a brother’s malice, a child’s immaturity, the disintegration of an estate with high symbolic value, or simply the fear of causing a family rift. There’s no shortage of cases.
« The stories we come across in our daily lives are each creepier than the next »
Who hasn’t heard or witnessed a story of brother-against-brother conflict generated by a disagreement over a legacy or inheritance? « The stories we come across in our daily lives are each creepier than the last. I saw a case where a dying man’s gift of a villa to his wife was annulled by his siblings. They kicked out his daughters, justifying it by the fact that their brother was not in full possession of his cognitive faculties« , says Saïda Chraïbi, a notary in Casablanca.
Sometimes, fratricidal tendencies take on their full meaning when things get out of hand and physical integrity comes into play. « When my grandfather died, his estate consisted of a small social housing apartment in Salé. One of my uncles was in prison at the time. When he left prison, he discovered that the apartment had been sold by his siblings, who divided the proceeds between themselves without telling him. A few days later, he was back behind bars, this time for the rest of his life. He had killed one of his brothers, whom he accused of being the instigator of this ‘scheme’, » laments Mourad, 26, a marketing manager in Casablanca.
In Morocco, inheritance law is documented in Book VI of the 2004 Family Code. For Muslims, who make up 99.9% of the population, we refer to the Malékite rite of Islamic law. This is predominantly agnatic (filiation exclusively on the male side), and considers males to be universal heirs who can, in certain cases, claim the entire estate.
The courts are overwhelmed by inheritance disputes
Women, known as fard’ heirs, inherit fixed and subsidiary shares. In addition to gender inequality, Moroccan law overlooks a number of situations that are now widespread in our society. For example, adopted children are excluded from the circle of heirs. The same applies to foreign women and their non-Muslim children in mixed marriages. So, while we await an ijtihad (independent ruling) from our theologians, or outright legislative reform, what can we do to ensure an equitable and, above all, acceptable division of the estate?
« A spouse who has lived in a main residence all his or her life can lose it and find himself or herself out on the street »
« Since it’s legislation inspired by religious precepts, there’s very little room for manouver. An inheritance law doesn’t say who inherits what, it says who the heirs are and what their share of the inheritance is, » explains Abdelmajid Bargach, a notary in Rabat. « In other words, if a spouse has lived in a main residence all his or her life, the house becomes part of the estate, and he or she can lose it and end up homeless, » he adds.
Very often, Moroccans’ inheritance is made up essentially of real estate: houses, buildings, plots of land… One classic technique to protect an estate from future conflicts is the donation or « hiba » in Islamic terminology. This is a simple transfer of ownership of a property without consideration from a living donor to a designated recipient. It can be drawn up by a notary or an adoul, who records and certifies legal documents.
« My mother is thinking about how to pass on a future inheritance, that of her father, directly to her daughters. The adoul told her it was possible thanks to a donation« , testifies Asmae, 28. Advantage: it is tax-free in the most recurrent cases. Disadvantage: the donor loses all control over the property to the designated recipient(s). Also, this could lead to conflicts, if the latter fails to show maturity or risks squandering the asset.
Reliquishment for better inheritance
Specialists in this field – lawyers, notaries, adouls and other asset managers – interviewed by TelQuel recommend relinquishing the property in some cases. The reasoning behind this is simple: the property is divided into bare ownership (nue-propriété) and usufruct (usufruit). During his or her lifetime, the donor transfers ownership of a property to person X, but continues to receive the income generated by the property until his or her death.
« Our mother is trying to protect us because she doesn’t know whether her relatives will be benevolent after her death »
« We are three daughters. When my father died, we didn’t have any problems with the inheritance because my uncles refused it. But our mother is trying to protect us because she doesn’t know whether her relatives will be as benevolent after her death, » confides Asmae.
She continues: « So, whenever she buys something, like land or an apartment, she puts it in the name of her three daughters. In the case of the apartment where she currently lives, she preferred to dismember the property, i.e. keep the usufruct but share the bare ownership between her three daughters« . But this procedure is quite costly. In Asmae’s case, the adoul charged over 10,000 dirhams.
It remains to be seen how the bare owner can benefit from the relinquished property after the donor’s death. Let’s imagine a property with an estimated value of 100. The donor signs over the property as a gift of bare ownership to his or her heir. In this case, the tax authorities will determine the shares of bare ownership and beneficiary.
Let’s take the case where the donor is aged between 40 and 50 and the shares are divided equally between the bare owner and the beneficiary. « When the donor dies, the beneficiary receives full ownership of the property. When he sells the property for 150, the tax authorities will calculate the capital gains tax on the basis of a differential equal to 150-100=50 and not 150-100/2=100« , explains tax lawyer Kamal Himmich.
To prevent the estate from being squandered, specialists advise dismembering it
The State, providential at last?
The Family Code itself offers a number of ways of circumventing inheritance problems. The testament or « wassiya » is proof of this, as it enables a legatee to be designated. The « wassiya » must not, however, concern more than a third of the testator’s total assets. Otherwise, the agreement of the other heirs must be obtained.
This procedure is particularly useful in the case of mixed couples, where the non-Muslim wife does not act as heir. « Waqf can also be performed on behalf of the State. In other words, for a plot of land or an apartment, for example, the State exploits the property and the profits are paid to the designated heirs. In this case, we speak of waqf ahlî« , explains Amina El Krimi, one of the first 300 women to become an adoul, through an unprecedented competition held in 2018.
« SCIs can be used for transmission and can also solve the problem of indivision »
Some people opt to set up a société civile immobilière (SCI) which is the equivalent of a living trust specifically for real estate. This alternative is recommended for larger estates. The aim is to place the real estate assets in a structure that will manage them. « Many people today think that the SCI has no place. There has been a great deal of debate on this subject. Personally, I think there’s every reason to hope for this type of company, since it can be used to transfer property, and it can also solve the problem of undivided ownership« , notes Bargach, who also sees it as a good means of tax optimization.
« He adds: « As soon as you have real estate assets, and as part of the structuring of family assets, tax law allows you to make a contribution to an SCI with an exemption from registration duties, with the capital gain carried forward to the next transaction, either on the capital or on the direct property.
The headache of financial assets
« In Morocco, many businesses crumble as one generation passes into the next »
The transfer of shares represents a challenge for specialists, because it involves the future of a business, as well as that of employees and partners who are not, in theory, directly concerned by the succession. « A company can’t afford a break-up, because it’s involved in business relationships with suppliers and customers, and has employees. When there is a death, there is a problem with the continuity of the company. What we’re seeing in Morocco is that many companies crumble as one generation passes to the next, » notes Bargach.
The most emblematic case is that of Ynna Holding, the group founded by Miloud Chaabi, whose death in 2016 caused tensions within the family clan (see box below). « If I have one piece of advice to give to company directors, it’s that it’s absolutely essential to anticipate the takeover, » asserts our interviewee.
The strategic aim of family offices is to preserve healthy family ties that are not corroded by inheritance disputes
There are several ways in which businessmen can ensure a « smooth » succession. According to Tarik Belghazi, founder of Morocco’s first Family Office, « The most common is life insurance, particularly through the beneficiary clause« . This is a form of insurance in which a person guarantees the payment of a capital sum with interest, or an annuity, to a specified beneficiary. « It is also possible to envisage the dissolution of a company when it exists in the form of a limited company. The beneficiaries hold the capital, but the usufructuary parent retains decision-making power until his or her death« , says Tarik Belghazi.
Miloud Chaabi, trench warfare
It’s one of the most important inheritance cases of recent years. Miloud Chaabi, one of the kingdom’s greatest fortunes, died in April 2016 at the age of 85, leaving behind a fortune estimated at over twenty billion dirhams. The group he founded, Ynna Holding, was active in a number of sectors, including retail, real estate, hotels, ceramics, petrochemicals…
Miloud Chaabi was a pious man who believed that inheritance should be distributed according to the rules of Islam. As a result, as soon as he passed away, the heirs began tearing each other apart over how to divide up the family estate. According to several sources, some wanted their father’s property to be divided purely and simply among the heirs. Others wanted to keep everything within the group.
The deceased’s last wife, Mama Tajmouati, took over the operation of the group in order to bring the family together. Board meetings were stormy and decisions were spread out over time. In September 2016, Mouhcine Chaabi publicly accused his sister Asmaa and brother Faouzi of wanting to use the family fortune for political ends.
In January 2019, after three years of stalemate, the heirs decided to recruit an outsider to replace Mama Tajmouati as the head of Ynna Holding. They chose Fayçal Chaabi, the eldest son, who had never been involved in the family business.
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Miloud Chaabi’s sons at their father Miloud’s death prayer (Al Janaza)
Wealth management: family offices come online
Advice on wealth management and transfer, once the domain of lawyers, notaries, adouls and other bankers, is now being provided by new players in Morocco: family offices governed by law 19-14 on the stock exchange, brokerage firms and financial investment advisors.
Belghazi Family Office, set up by former private banker Tarik Belghazi, and AXXAM, recently launched by Meryem Kabbaj, former director of BMCI Banque Privée, are among them. These structures offer their services to wealthy families, drawing on their cross-disciplinary expertise to manage the complexity of an estate comprising land, property and several family businesses.
In the vast majority of cases, their strategic objective is to preserve healthy family ties that are not corroded by quarrels over money. As part of their fiduciary obligation, these offices remain discreet and maintain the privacy of their clients.
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Three questions for tax lawyer Kamal Himmich
Are Moroccans increasingly thinking about succession planning?
More and more people are open to inheritance planning techniques, especially if they only have daughters. It’s important to remember that Morocco has a favorable tax framework for inheritance and succession. Today, if you inherit an agricultural property and sell it to another heir, the capital gain is exempt.
Some foreigners even become tax residents in Morocco because it’s more advantageous for them. Take the case of someone with a child in France and a child in Morocco. The child living in France will pay 45% of his inheritance to the French state, whereas in Morocco he pays nothing.
What about inherited shares?
As with real estate, there is no revaluation for shares. When you inherit shares and subsequently sell them, their value at the time of acquisition by the person you inherited them from is taken into account. This allows you to make substantial capital gains.
Are there assets that are not known at the time of inheritance?
This can happen if certain assets have never been registered with the land registry. In some cases, these assets have long been worthless, but have acquired value with the expansion of urban areas.
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Written in French by Omar Kabbadj and Soufiane Chahid, edited in English by AngloMedia.
