What is estate planning?
‘Estate’ is the English word for inheritance. Estate planning is a concept that has blown over from the United States, referring to the advice that focuses on legal guidance and tax advice with respect to the transfer and preservation of (family) assets. The objective of estate planning is to transfer accumulated assets to the beneficiaries in the most economic way. Estate planning is a part of ‘financial planning’. Financial planning has more to do with asset management, pension schemes and the spending capacity desired in the long term. The tax burden of the income tax plays a major role in this. Estate planning is concerned in particular with the measures that can be taken to make the future estate as small as possible, thereby restricting the total amount of inheritance tax. This entails quite a number of items. Gift tax, inheritance law, matrimonial property law and tax law all play a role in the planning. The following questions are addressed: • Should your marriage contract be amended or not? • Should you draw up a will? • Would it be better to transfer your assets during your lifetime? It is very important that the arrangements that are made complement one another. Saving on inheritance tax is not the only aspect that estate planning should take into account. Not everything may be sacrificed for tax savings. To arrive at the most responsible choice, it is necessary to consider carefully the advantages and disadvantages of the transferral of assets. Decisions that are taken now will likely only have an effect after a number of years, and much could change in the meantime. A disadvantage of transferring assets during your lifetime is that, in many cases, tax must be paid immediately. Estate planning involves gift tax and inheritance tax. Gift tax is imposed if assets are transferred during your lifetime. Inheritance tax is imposed at the time of the inheritance of the estate. The rates and the exemptions for the gift and inheritance taxes are the same. Thus, from this point of view, the gift tax is actually an advance on the inheritance tax payable by the beneficiaries. Payment of gift tax can therefore be regarded as liquidity costs. You most likely know the adage ‘a gift cannot be ungiven’; in principle, gifts are irrevocable and cannot be undone after the fact. Another thing to consider is whether or not you lose your financial independence with respect to your children once you have transferred your assets. It is therefore also important that you, together with the (junior) civil-law notary, address the question of how you will retain control of your assets — by, for example, gifting on paper, making a gift subject to an administration scheme and/or working with a revocable gift.
Estate planning is not simple subject matter. Moreover, the law is constantly changing, and knowing the current developments in this area is crucial. A (junior) civil-law notary is the ideal expert to advise you about this difficult topic. He or she will be able to provide you with a list of all legal, financial and tax implications. We invite you to examine the possibilities together.