Wealth planning, transition and optimisation

Optimising wealth and ensuring that it is transferred to the owner’s relatives in the best possible way by living hand or upon death can be a complex matter. This may involve difficult personal decisions and navigating a complex set of rules on tax, company and inheritance law and administration of the estate of a deceased person. We know that the exercise is difficult and requires insight, guidance and understanding of the individual client and the client’s situation.

Plan ahead

It can often be an advantage to transfer wealth to children or others in whole or in part while you are still alive. This can reduce taxes if the transfer is made while the value and thus the taxes are low, and the gift tax can be structured to be lower than the inheritance tax. Valuation is a key part of succession and succession planning. At Gorrissen Federspiel, we have an Economic Analysis practice group with experts in this field working together with our lawyers to ensure the optimal solution for our clients.

With wills and marriage contracts, you can – in addition to ensuring the proper distribution of assets between heirs – also reduce taxes. Ensuring the optimal solution often involves an interplay between partial succession by living hand and the creation of a marriage contract and a will.

Examples of solutions

• By naming a charitable organisation as heir to a portion of the inheritance, you can ensure that the organisation inherits a small amount and that the inheritance to family members is larger than if you do not create a will. Both the charitable organisation and the family members benefit from the measure, while inheritance tax is reduced. The scheme is recognised by the Danish tax authorities but is unfortunately often overlooked.
• If a testator owns a company that he or she created from scratch, death may prompt the payment of significant capital gains tax. Often the heirs may succeed in the tax, but this merely postpones it. By combining a marriage contract and a will, this tax liability may in certain situations be limited or completely eliminated, which in Danish kroner may result in tax savings in the millions for the heirs.
• In a will, the inheritance may be made separate property so that it does not have to be divided in the event of a divorce. A will may also ensure that the inheritance stays in the family and is thus secured not only in the event of the heir’s divorce but also in the event of the heir’s death. A will may determine whether up to 75% of the inheritance ends up with the heir’s spouse and perhaps his or her children from a previous marriage, or whether the full 100% stays in the family. The latter is ensured by combining the separate property with a set of successive beneficiaries. The area of priority of succession is complex and dynamic, but in some cases, correct and appropriate application may make all the difference to the heirs.

Wealth planning

Overall, wealth planning is a dynamic process. Together with our clients, we typically create a long-term plan or have a clear agreement that the matter will be discussed further at some point. The plan is reviewed and adapted on an ongoing basis because views on the issue often change over the course of a lifetime and because tax rules in particular are constantly changing. We offer to manage this process for the client, including keeping the client informed when regulatory changes or changes in the client’s situation make a reassessment relevant.

In addition to limiting taxes, our advice may also help create predictability and eliminate the risk of later conflicts in the family.

We have leading experts in all legal aspects of wealth planning, transition and optimisation. We offer highly specialised advice in even the most complex cases and work with our clients to navigate and balance the many complex issues. We have the deep and commercial insight to know that every client is different and has different wishes and needs, and our advice is always based on this. We focus on identifying the client’s situation, challenges, needs and wishes and present the client with relevant solutions in a specific and understandable way. Then, on a fully informed basis, we plan the best solution for the client in close dialogue with the client and the client’s other advisers – often foreign advisers, as we also work with clients with assets and interests outside Denmark.

If a succession involves a business, our advice will also include concluding agreements between the new owners that ensure that the interests of both the owners and the business are safeguarded in the new ownership structure. An inappropriate ownership structure should not be allowed to destroy a family business. Unfortunately, there are many examples of this, but this risk is eliminated with wealth planning. The right solution is individual and highly dependent on both the family and the business. To ensure the right solution, we need to understand both the family and the business. We have the experience and insight to solve this task – not to mention the realisation that understanding the client and his or her situation is key to ensuring the optimal solution.

As part of wealth planning and transition, we also advise on all aspects of pension, insurance, advancements, gifts and family loans. Taxes can also be saved here, and there may be unfortunate consequences if you act on an uninformed basis.

Learn more about our experience