From generation to generation

How to grow, secure and transfer wealth from generation to generation wisely, while considering important legal aspects? We have collected a list of issues that should be considered when creating the plan.

It is recommendable that a lawyer specialising in family and inheritance law prepare the will and other legal documents. You can book an appointment with the bank’s lawyer by calling customer service at 0200 2590 Mon–Fri 9–16 (local/mobile network charge).

  • 1. What do you value?

    1. What do you value?

    Before you start planning the transfer and distribution of your property to the children, it is good to start by thinking what you personally consider important.

    Think about how and where you would like to live out your days. If you are used to living in a single-family detached house, it is worth considering how your own capabilities and money will suffice taking care of the home, alone or together.

    With age, health-related expenses usually take up an increasing part of your money, which is worth considering when planning the economy. The cost of care during the last years of life may take many by surprise.

    Only after you have your own plan for a good life in order can you think about whom you want to give money to during your life and whether you want to leave assets to the younger generations or to a cause important to you.

  • 2. Talk about inheritance planning together

    2. Talk about inheritance planning together

    We Finns are not accustomed to talking about money in general, and inheritance planning is a sensitive topic in many families. Some of us want to spend their wealth during their life but some want to donate to people close to them. One way or the other, it is sensible to talk about this with the closest ones when you are still fit to do so.

    It is equally important for you to express your thoughts as it is to find out what thoughts your children may have about the property they may inherit. With immovable property in particular, it is worth considering that both detached houses and summer cabins require continuous care in order to maintain their value.

  • 3. Distributing property

    3. Distributing property

    Life expectancy in Finland has increased by 20 years during the past 50 years *). Longevity often means that there may be four generations of a family alive at the same time. The more generations there are, the more possibilities there are for planning.

    Part of the property can be given to close ones already during one’s own life, and there are several options for this. This decision is supported by the changed inheritance and gift taxation, with reduced burden as of the beginning of 2017 in all tax classes.

    If you want to donate your property, it is recommended to draw up a document about it. It is important to ensure that other legal documents as well, such as a continuing power of attorney, marriage contract and will are in order and, most importantly, up to date.

    Read more about inheritance and gift taxation: vero.fi

    *http://www.stat.fi/org/tilastokeskus/elinajanodote.html

  • 4. Ways of distributing property

    4. Ways of distributing property

    When donating securities with profit, it is possible to gain tax savings compared to the tax paid on capital gain, as the gift tax payable by the recipient of a gift may be lower than the tax on capital income, which the person giving the gift would have to pay on capital gain in case they sold the securities.

    When selling property, a home for example, below market price, there are no gift tax consequences for the sale if the selling price exceeds 75% (3/4) of the fair market value of the home. 

    Example: 
    A flat of €100,000, selling price is €75,000, the buyer will have to pay gift tax for €25,000. Selling price €75,001, no gift tax.

    A person can donate property every three years at a maximum value of €4,999 without gift tax consequences. If the value of a single gift or the sum total value of all gifts from a single donor over the course of three years is at least €5,000, the gift or gifts are entirely subject to gift tax.

    You can give advancement to your heirs. An advancement refers to a gift that is intended to be taken into consideration after the donor, i.e., decedent, has died and the stage is reached that their estate is distributed.

    Read more about the distribution of assets: vero.fi