Can you simply give a large sum of money to your children by means of a simple bank transfer?
Wealth planning in 2025 is trendier than ever because of inheritance taxes, which are anything but lenient. Increasingly, people are looking for the most tax-efficient way to plan their wealth transfer. Many parents want to transfer a large portion of their wealth to the next generation well in advance. This can involve movable assets, but also immovable assets such as a home.
What if one parent already wants to transfer a particularly large investment portfolio or a substantial amount in their savings account to their children? What can they do? Can the parent simply transfer this to their child's savings account?
One of the most common methods for transferring bank balances in a tax-efficient way is the gift technique. This will sound familiar to you.
A gift is one thing, but its manifestation is something else. A gift of a certain sum of money can be structured in various ways.
1. The donation of a sum of money by notarial deed
It could be decided to have the donation of a certain sum of money be made through a notarial deed. In principle, this is required, as it is stipulated by law.
Every deed of gift must be drawn up before a notary, under penalty of nullity.
In principle, if you want to donate a certain amount, you would legally have to visit a notary, who would then execute a deed of gift.
A disadvantage of a notarial gift is that it is registered, meaning that inheritance tax of 3 or 7% will still be due. An advantage, however, is that the gift tax will still be lower than the inheritance tax, which can be as high as 27% depending on the amount.
If you choose this method, you'll have more certainty. You'll receive proof of registration of the gift, allowing you to later prove that the property was donated.
However, contrary to what the law suggests, a gift of money can also be made in a different way. These alternative methods do not require mandatory registration, so gift tax will not automatically be levied in that case.
2. A bank donation
A first alternative way of donating is the so-called bank gift. With this method, the donor transfers a certain amount to the account of the person they wish to give it to. This method does not require a notarial deed and is therefore an exception to the rule that a gift must always be made by notarial deed.
This form of gift has several advantages:
- It is a gift that can be made without too many formalities;
- In principle, no gift tax is levied on it (provided you survive for 5 years after the date of the gift).
However, it is advisable to observe a few rules. First, the donor should ideally live for 5 years after the bank gift. If the donor dies within 5 years of the gift, the beneficiary of the sum will be subject to (high) inheritance tax.
Article 2.7.1.0.5, §1 VCF stipulates the following:
§ 1. Assets for which the competent authority of the Flemish administration provides proof that the deceased had free use of them during the five years preceding their death are deemed to be part of their estate, unless the benefit is subject to gift tax or registration duty on gifts inter vivos. The heirs or legatees have a right of recourse against the donee for the inheritance tax paid on those assets.
If the competent authority of the Flemish administration or the heirs or legatees prove that the benefit accrued to a specific person, that person will be considered the legatee of the gifted property.
For the purposes of this paragraph, a benefit for which a gift tax exemption has been applied is considered equivalent to a benefit subject to gift tax or registration duty on gifts inter vivos.
Furthermore, it's best to have a number of (evidential) documents that can be registered at any time. As mentioned above, a bank gift is not, in principle, required to be registered, unlike a notarial deed. However, it is advisable for the donor to have a number of documents drawn up that can be registered whenever they wish.
A flat rate of 3% is charged on these documents. This (later) registration can be useful if the donor fears, for example, that they won't reach the five-year period. This way, gift tax will still be levied later, but it will still be lower than the inheritance tax.
In the context of a bank gift, it's best to proceed in the following order and with the following documents:
A letter of intent – in this letter, the donor will express in the future tense their intention to donate a certain sum to the beneficiary. The advantage of this is that the terms and conditions associated with the gift can also be included (e.g., the sum must be returned if the beneficiary predeceases the donor).
"I intend to donate X to you."
This letter is best written in duplicate. One is sent to the beneficiary by registered mail and must not be opened by the beneficiary. A second letter is sent to the beneficiary by regular mail and may be opened by them. This step is crucial for verifying the date.
Once the letter of intent has been sent and received, the actual transfer is made. This may sound like an easy step, but it's still important to keep a few things in mind. For example, the donor should leave the message blank. Messages such as "donation" or "bank gift" can potentially cause problems with the tax authorities. In principle, you should not mention that you are making a gift at that time, as this would normally have to be done by notarial deed.
Finally, after the transfer, it's best to draw up a document (pacte adjoint), this time in the past tense, which must be signed by both the donor and the beneficiary. With this document, the donor declares that they have donated and the beneficiary has accepted. This document can be submitted for registration at any time afterward, at which time 3% gift tax will be due.
"I have donated €500.00 to you."
The above-mentioned documents can be submitted for registration at any time afterward (e.g., if the donor is seriously ill and will not survive the 5-year period).
The bank gift is a tax-efficient way to easily transfer assets to the next generation, without – in the most favorable scenario – incurring gift tax, provided certain rules are properly followed.
3. Then just give? (The gift)
A final option might be to withdraw the money and simply physically hand it over to the beneficiary. This is possible, but even in this case, it's best to remain alive for the next five years. The Flemish Tax Code also stipulates that the Flemish authorities will tax anything given away within the five years before the person's death.
If the tax authorities notice that large sums of money were withdrawn from the account in the five years before the person's death, this will still be subject to inheritance tax.
Do you need help with the preparation of the above documents or do you have questions about organizing your assets in a tax-efficient way?
Then schedule an appointment on our website. There may be elements you might not have considered when planning your estate, but which are nonetheless important. When planning your estate, it's often the small things that can cause major concerns.