For single people with no partner or children, at first glance succession planning may seem unnecessary. Nothing could be further from the truth! With thoughtful planning, you can save your heirs from unpleasant tax surprises and ensure that your assets go to the people you want.
What happens to your estate if you do not make any arrangements?
Without a will, the law determines who gets your estate. If both your parents are still alive, they will inherit half of the estate, while the other half will be divided among your siblings (or their children, your nieces and nephews). If none of these persons are still alive, then the focus shifts within the family to uncles and aunts, and failing that, their children. Friends or other loved ones who are not related to you are excluded from this legal arrangement.
So without planning, your estate could be heavily taxed and also end up with relatives you would not choose yourself.
The power of a will
With a will, you decide who gets what. In fact, you can disinherit any of the people mentioned above by bequeathing your entire estate to a neighbour, best friend or charity.
Make sure the taxman is not becoming your main heir
Inheritance tax rates is another important issue. In Flanders, parents pay up to a maximum of 27% on the share they receive from the estate, but for all other heirs (brothers, sisters, uncles, aunts, friends, etc.), the maximum rate rises to as much as 55%!
Friends bequest
In your will, you can designate one or more people as a "friend" so as to save them up to EUR 3,300 in inheritance tax. Note that if more than one person is designated as a friend, then this tax relief applies to them together, in proportion to the amount they receive from your estate.
Near future
The Flemish Government is currently working on a new regulation that would reduce inheritance tax rates for singles. The new rules are expected to apply to deaths occurring from 1 January 2026 onwards. However, the Decree is still in preparation. It is therefore uncertain whether the new regulation will be implemented and what it will entail. More information will follow later.
Donating during your lifetime
Gifts can be a worthwhile way of distributing your wealth during your lifetime, while you can still see the effect it has for yourself. In fact, gifts are often taxed more advantageously than inheritances. For example, the gift tax on a registered moveable gift is 7%, regardless of the size of the amount donated.
Healthcare power of attorney
Above all, don't forget to think of yourself! As a single person, it is especially important to think ahead. What if one day you are mentally unable to manage your assets yourself? With a healthcare power of attorney, you give one or more trusted individuals the authority to do so on your behalf if you are no longer capable.
Key issues:
- The healthcare power of attorney should preferably be drawn up through a notary.
- In addition, you should designate a subsequent trustee, in case your first choice is no longer an option.
Charities remain a valuable option
The duo bequest tax benefit, which allowed you to significantly reduce your inheritance tax by including a charity in your will, was abolished in Flanders. Nevertheless, charities remain a worthwhile option: not only do you sponsor a good cause, but in addition, charities benefit from a 0% rate for both gift tax and inheritance tax. This means that donations or bequests in favour of charities are not taxed.
Time for action
Succession planning is relevant for those without a family, too. As a single person, you even have more freedom to shape your estate as you wish. But that freedom requires action.
What can you do?
- Draw up a will and decide who will inherit what.
- Let your friends benefit from the friends bequest.
- Consider gifts during your lifetime.
- Arrange a healthcare power of attorney in case you become incapacitated.
- Consider a role for charities in your planning.
Seek guidance
Succession planning is complex. As experienced consultants, we can help you explore the various options and work out a strategy that best suits your situation and needs.
Give yourself the greatest gift this Singles Day: peace of mind! Arrange your estate so that your assets end up where you want them to, and your loved ones are not left with worries or a sky-high inheritance bill.
Feel free to contact us for a no-obligation discussion about your succession planning.
