Financial taboos: inheritance and money in the family
How much you earn or want to earn, how much debt you’re in or how much you’re set to inherit are often touchy subjects. We can be afraid to talk about them with other people. However, engaging in an open, honest discussion can help to lift a financial weight and lead to healthier finances overall. It may even improve your relationship with your family, friends or partner.
For this video series, we invite four members of the ABN AMRO team to break money taboos by answering some ‘awkward’ questions. Part 1 focuses on inheritance and money in the family. Watch the video and read the tips from our advisers below about gifts and wills.
Tips from our adviser
Jenny de Jager, an adviser from our Preferred Banking team, frequently talks to families about gifts and inheritance.
"I remind every client about the importance of writing a will and living will, as it’s something many don’t prioritise enough. There are plenty of people who think you write a will only when you’re old. I tell them about the risks of that approach. What happens if you have an accident today? Having a will in place today means your wishes will be carried out whatever happens."
"Many people put off thinking about their will. That’s why I start the conversation and share information with them. I hope to give them the nudge they need to take action."
"If I know a client has parents who are still alive, I advise them to talk about the subject. It’s a way of showing you care about your parents. Try asking the following questions to start off: ‘Is there a plan in place if you’re unable to make decisions on your own? Have you put everything down in writing?’ While your parents are still of sound mind, this is the time to ask whether they have set everything out in a will. The will should clearly state what happens to their estate when they pass away."
Receiving a gift from a parent
If you receive a gift from a parent, you won’t pay inheritance tax as long as the value of the gift is below the tax-free threshold. What are the different types of gifts?
- The annual tax-free threshold for gifts is € 6,633. This threshold is indexed every year.
- If you’re aged between 18 and 40, you may receive a one-off gift of € 31,813 without paying inheritance tax.
Anything above that amount is subject to inheritance tax. It’s usually the giver of the gift who pays inheritance tax, but you have the freedom to agree on who pays.
What does a will set out? And how do you manage debts in your will?
A will is a legal document that sets out how a person wishes for their assets and estate to be divided after they die. The exact contents of a will can vary depending on the wishes of the testate (the person who has left a will).
If the testate has debts, these debts may not be mentioned explicitly. If you’re an heir, you always have the option to accept an inheritance under benefit of inventory. Under benefit of inventory means you accept the inheritance, but not outright.
This lets you establish the deceased’s persons assets and liabilities before accepting the estate. Even though you are considered an heir in that case, you don’t take on the liabilities on the estate. All debts are first repaid from the estate, and anything left over is divided among the heirs.
Do I need to write a will?
Writing a will is an important step in organising your estate. You can write a will at any point in your life. Whether you’re single or have a family, it’s important to have a will in place. This is even more true for specific life events or circumstances, such as starting a family, a change in your financial situation or divorce.
Even if there are no major changes in your life, it’s a good idea to regularly review your will to make sure it continues to reflect your wishes. We recommend consulting a notary, as they can help you find answers to legal questions and make sure your will is valid.
If you want to talk about money in the family with us, please get in touch. An adviser from the Preferred Banking team will tell you more about your options. You can choose to talk to us on your own or joined by your partner or parent(s).
