Camille Van Vyve
14 Mar 2024
Investing in your 70s: optimize your estate
You are enjoying your retirement and you may have inherited. At this stage, you are not so concerned about the allocation of your portfolio as about the best way to pass on your wealth to your heirs. It's time to prepare your estate to optimize it from a tax perspective.
A golden rule: anticipation
You have already structured your wealth to live comfortably during retirement, which you take full advantage of. Now, you want to gradually transfer your capital to save your heirs from cumbersome and costly procedures at the time of your death. Several operations can be undertaken: the drafting of a will on the one hand, but possibly also the gradual transmission of your movable assets (cash or portfolio of securities) and real estate. A gift to your heirs that is even more generous as it will save them from having to pay significant inheritance tax later.
Do not complicate the life of those around you
During your life as an investor, you may have invested part of your capital yourself, in several types of products, and perhaps entrusted another part to one or more financial institutions. At this stage, it is necessary to simplify things! For you and for those around you: if you were to die, it is in your interest to leave your spouse and your heirs an investment structure that is easy to understand and maintain over time.
Index-based management, simple and effective in the long term
The investment portfolios offered by Easyvest perfectly meet these criteria. Invested in global equity and Eurozone bond ETFs, they are extremely simple to understand, do not require regular trading, and are built to maximize long-term return prospects.
Transgenerational investment
Have you liquidated “secondary” portfolios and perhaps sold real estate or inherited it? Easyvest can help you invest this capital in a transversal or transgenerational way: in this way, the investment will be structured to benefit both you and your heirs, with the aim of transmission.
Account in joint ownership
Also called “joint account”, the account in joint ownership can be created between spouses or between brothers and sisters, in particular. If this was not the case in the past, the seventies can be a good time to invest in joint ownership with your spouse, so as to involve her or him in the management – very simple with Easyvest – of your portfolio. This will also facilitate succession in the event of death, since half of the portfolio will already belong in full to the surviving spouse.
Bare ownership and usufruct dismemberment
Another option regularly considered is the bare ownership/usufruct dismemberment. It allows you to transmit the bare ownership of the capital to your heirs, while enjoying yourself the fruits of this capital in the form of an annuity. With this in mind, the capital can be invested with a strong equity component, since the investment horizon goes beyond you. Easyvest regularly opens accounts of this type, which are generally joint accounts: the children have joint ownership of the bare ownership of the capital invested, and the parents enjoy the usufruct of this capital in the form of an annuity.
Donation with registration
If you open an account in joint ownership in the name of your children (with or without bare ownership/usufruct dismemberment), you are actually making a financial donation. This gesture is not without consequences. To completely and directly release your heirs from inheritance tax on the amounts donated, you will have to register the donation with the tax authorities and pay the gift tax. The difference is significant: in Belgium, depending on the Regions, inheritance tax in the direct line (ascendants or direct descendants) can go up to 30%, while gift tax of the same order is between 3 and 3,3% depending on the Regions.
Donation without registration
You also have the freedom to give sums of money to your children without registering the donation or being liable for duties. But in the event of the death of the donor within three to five years following the donation (the period varies according to the Regions), the donees will be liable for inheritance tax on the amounts received. It is therefore useful to keep proof of the date of the donation.
Advantages of a side agreement
If you wish to add certain conditions to this donation, on the administration or use of the funds for example, you can draft a side agreement, dated and signed by the parties. You will find the details of this formula and a side agreement model in a previous blog devoted to this question. The side agreement can supplement any donation, whether or not it is registered with the tax authorities. This "private deed" will also constitute proof of the date and validity of this donation.
Do I have to go through a notary?
Tax law does not require a notarial deed for donations. The donor can therefore register a financial donation directly with the tax authorities, with or without a side agreement. The notarial deed is however required for real estate donations, and strongly recommended for indirect line financial donations (because other legal heirs could oppose it) or for "in extremis" donations (when the donor is about to die). In this case, the donation can be recognized for tax purposes as soon as the deed is signed by the notary and the donor thus avoids having to register it with the tax authorities.
Easyvest portfolios, guarantee of simplicity for your estate
Our investment portfolios offer many advantages for the preparation and implementation of an estate. By involving your spouse and children now, you ensure continuity: your spouse will have all the keys in hand to ensure their financial autonomy in your absence, and your children will be able to continue to grow your assets with ease. Our managers are at your disposal to discuss the different formulas presented in this blog!
Read the other articles in the “Investing by age” series: investing as of 1 year old, investing in your 20s, investing in your 40s, and investing in your 60s.