How can you make succession planning easier to talk about?

Good planning starts with a good conversation

At FONS, we find that there is often a lot of trepidation about putting this on the table. That's why we started looking for the "right" approach.

At first this did not seem easy: in one family, finances have been openly discussed for years, but in other families the children have no idea of the build-up or size of the parents' assets.

But, regardless of family financial openness, every question regarding inheritance begins from a concern: what will happen and what will it cost? Only to move relatively quickly to: what can we do about it?

For parents/testators, this is easier to bring up: often they have thought about this for some time, want to take certain steps and discuss it with their heirs. After all, they want to "donate with a warm hand rather than a cold one," but they want to avoid giving away everything they have already donated purely to minimize the inheritance tax. It is often difficult to estimate how much reserves they will need later on. Nobody wants to donate first and then have to ask for a refund later on...

For children/heirs this is a bit more difficult: they do not want to come across as "greedy for money" but are genuinely concerned about financial ups and downs in a period that will be difficult enough with the death of a loved one.

But how do you start such a discussion?

Succession planning is often mainly about who inherits what, rather than about what it will cost. A conversation about inheritance is best started from that angle: rather than talking about how high inheritance tax is and how, for example, gifts can reduce it, it is better to talk about what the testator wants to happen with the estate after his death: what about the family home? What about the (family) partnership? What about the vintage car and jewelry? Who gets what? Do the grandchildren get something?

Any conversation that starts from a question about the testator's wishes is a good conversation and encourages all involved to think about it.

That's where FONS proves its worth: we make a situation sketch "as is" and answer, among other things, the question, "what if there is a death today?"

From there, we will formulate and discuss with you the various options for improvement. This will allow you to make an informed choice of the most pragmatic solution.

After all: not everyone needs, for example, a family charter, the creation of a Civil Partnership, redrawing the corporate structure, prior donations, ... often you can get very far with a simple adjustment to your will.

As soon as the wishes are clear and the necessary choices have been made, the necessary arrangements can be made in collaboration with notaries - and where necessary with external specialists.

A real-life example

Jan Janssens (fictitious name) founded the family company "Janssens NV" in 1985 and is today 100% shareholder. The NV has equity of €1.5mio. Jan owns 3 vintage cars (his passion in his little spare time) and a collection of watches. His wife passed away 10 years ago and Jan has a new girlfriend who lives with him in his villa in Brasschaat.

Jan has from his marriage a son (married and 2 children) and daughter (married and 3 children). The son is a dentist, the daughter and 2 of her children work at Janssens NV.

As Jan's retirement age approaches, his children are wondering if anything has actually been "settled", because when they talked about it as brother and sister, the following questions quickly came up:

• What if father dies?
• Do they each inherit 50% of everything? Or will the girlfriend also inherit something?
• Each of them inherits half of the family home and half of the Limited Liability Company?
• But how much is the Limited Liability Company really worth?
• Are they going to have to sell the family home for inheritance tax? Or does father still have savings? In any case, yes, but how much?
• How much is the inheritance tax really going to be?
• Then they have the limited company together, of which brother knows little or nothing, but they have to decide everything together?

After having asked father what he wants to happen with the business, the house, the vintage cars, the watches, ... after his death, the children visited FONS with father. After providing all the data, they received their "Guide to Peace of Mind" in which everything was given a correct value and the inheritance tax was calculated "as is". Based on that exercise, the Guide included several scenarios of possible solutions.

When the Guide was presented, it was openly discussed which combination of solutions was preferred. (Ed.note: This did not turn out to be the scenario with the least inheritance tax to be paid, but rather the one in which father felt best about the distribution. Sufficient liquid assets are made available to the children upon death, so that the inheritance taxes can be paid without problems.)

For the elaboration, the notary with whom father has been working for a long time was called upon, in consultation with an external tax lawyer for the establishment of Partnership and donation of the shares of the family company (after applying for Vlabel certificate).

Conclusion

Discussing your estate or inheritance is the first, important step to avoid (financial) perils in the future. You can always count on FONS for honest and independent advice on this matter.