“The biggest pitfall I see among clients is the belief that their estate is properly settled because they have a will,” says Lara. “Irrespective of whether the will is 10 or 20 years old or even recent, the arrangement is often not a good fit. Sometimes it doesn’t meet the wishes of the person who prepared the will at all. Or maybe the possibilities to save on inheritance tax aren’t fully utilised.
In this context, we might recommend our clients to include an option clause. Whereas in the case of a survivorship clause the estate automatically goes to the last surviving party, an option clause offers the last surviving party the flexibility to exert their choice depending on various factors, such as personal needs, age, health, the relationship with the children or even the inheritance tax rates at the time of exerting the choice.
Another interesting technique is generation skipping. In this case, you skip a generation and leave your estate to your grandchildren. The reason being that at the time of your death, your children are often in their fifties or sixties and have accumulated an estate of their own. Furthermore, generation skipping offers some nice tax savings, as your estate is spread across multiple heirs.
When transferring a family business, we recommend our clients to consider gifting it. Under certain circumstances, your family company can be gifted at a 0% rate. If no arrangements are made, the company will be inherited at a flat rate of 3% (heirs in the direct line and partners) and 7% (anyone else)."
“When I discuss their estate with clients, the initial emphasis is often on saving inheritance tax. However, when I dig a little bit deeper, personal motives sometimes surface as well. Consider, for example, children who are bad at handling money, or how best to leave an estate to children with mental and physical handicaps. Our clients worry about these things. If you listen carefully and offer relevant solutions, they are genuinely touched. Their minds are greatly put at ease."
"I always start a conversation by taking stock of my clients’ personal and financial situation”, says Lara. “I also look at any arrangements that have already been made and what the goals and wishes are. Based on this, as well as on the questions I ask them, I consider the various aspects of their estate planning. I look into the nature of a relationship and whether it has been formalised in writing in a cohabitation or marriage contract. I will then check whether a will has already been drawn up and whether it could be improved. I ask them whether they wish to transfer wealth while still alive. And whether provisions have been made for when someone is no longer capable of acting of their own accord. For instance, a healthcare proxy could be drawn up, which can also include gifts.
In the case of an entrepreneur, I also check if the articles of association and the shareholders’ agreements match the will."
“I notice that clients don’t easily ask their children for input when it comes to making arrangements for their estate. After all, this concerns their own wealth, which they have often accumulated with great effort, or a family inheritance. Nor is it always necessary, especially if there is still another parent and the money initially goes to the surviving parent.”
“I also often speak to parents who want to keep the money in the family and don’t want it to go family members by marriage. For instance, should their child die, the inherited estate passes directly to the grandchildren. When making far-reaching decisions like these, it is wise to discuss them with each other thoroughly. Otherwise, situations may arise in which, should the child buy a house with their partner and should one of them die, part of the house is directly inherited by the grandchildren.”
When one of the parents in a family passes away, there is, first, a great deal of sadness. Many emotions are involved. I speak with the surviving parent and possibly the children and explain the various ways to best settle the inheritance. I recently spoke to a client who went out of her way to express her appreciation for our help. The woman had lost her second husband. They had children together, but her husband also had children from a previous marriage. These are sensitive issues.
“I notice that an increasing number of clients want to transfer money to their children without their children being able to touch it just yet. Parents want children to develop normally and continue to make an effort. They worry that an inheritance or gift will make their children complacent.
For this, we recommend our clients to attach clauses to a gift in order to retain control and income. A clause that is often used is gifting with an obligation to pay interest, which entitles the gifting party to a periodic income. A non-disposal clause states that the money may only be used with the gifting party’s permission. Yet another clause is a gift subject to usufruct. In this case, only the bare ownership of a good is relinquished, and not the usufruct.”
“As an estate specialist I try to offer added value by translating complex processes and rules to the client’s situation. I don’t do all of this by myself, but together with various colleagues. What distinguishes us is our ability to combine our legal and tax backgrounds with our social and empathetic approach. This allows us to help our clients through a difficult period. As a result, clients consider us to be true confidants.”
Making a bank donation is fiscally advantageous and not difficult if you know what to pay attention to.
Wondering how this works? Watch the video (Video is in Dutch, click here for the French video) and contact our Wealth Solutions Team if you are interested.