What is more profitable - a gift or an inheritance?
Which is more profitable - a gift or an inheritance? What is more beneficial for the people to whom I will transfer the property? Is an inheritance or a gift taxed more? And can a donation be made after death?
1 Odpowiedź
Both donation and inheritance have their advantages and disadvantages, and which is more profitable depends on many factors, such as applicable tax law, the value of the property transferred, family relationships, as well as the goals and circumstances of the donor and recipient.
Donation
A gift is the transfer of property during the donor's lifetime. In Poland, there are certain tax reliefs for donations between immediate family members (e.g. between parents and children).
Advantages of donation:
- Financial security: You can help your loved ones while you are still alive, which can be beneficial if they need financial support.
- Avoiding court fees and probate proceedings: By transferring assets during your lifetime, you can avoid the fees associated with probate proceedings.
- Possibility to reserve conditions: A donation may be subject to certain conditions that must be met by the recipient.
Disadvantages of donation:
- Donation tax: Depending on the value of the donation and the degree of relationship between the donor and the recipient, gift tax may be imposed.
- No appeal: A donation is usually an irreversible act unless it is made subject to the right of revocation.
Decrease
The inheritance is transferred after the testator's death. It covers all the property left behind by the deceased.
Advantages of inheritance:
- will: The testator can specify in his will exactly who and what will receive from his estate after death.
- Protection of heirs: Inheritance regulations protect certain persons as so-called statutory heirs who have a guaranteed share in the inheritance.
- Reserve: Statutorily entitled heirs who were omitted in the will may claim compulsory share.
Downside disadvantages:
- Inheritance proceedings: Acquiring an inheritance often involves going through court proceedings, which may be time-consuming and involve additional costs.
- Inheritance debts: The heirs inherit not only the property, but also the testator's debts, unless they submit a declaration of rejection of the inheritance or acceptance of it with the benefit of an inventory.
Taxes: In Poland, both donations and inheritances are taxed in a similar way. There are three tax groups and specific tax-free amounts, which depend on the degree of relationship. These values may change, so you can always find up-to-date information in the applicable tax regulations.
Summary: The choice between a donation and an inheritance should be carefully considered and preferably consulted with a legal or tax advisor who will help assess the situation in the context of applicable regulations and the family's individual circumstances and goals.
