Bratislava, 09 March 2017 – Women who have achieved success and shaped public opinion met at the first Erste Private Banking Ladies Business Club with one main objective: to bring together successful female Slovak thought leaders in various fields, to present interesting topics and promote discussion of positive and negative experiences in business and personal life. “We have been organising various events for women for six years but now we have reached the stage where a Ladies Business Club can be held regularly and be even more beneficial. We have female clients who have achieved a lot in their lives. We want to create a platform where they can get to know each other and be inspired. The world we live in is still dominated by men, so we have to stick together and help each other,” said the director of Erste Private Banking Michaela Kaňová at the opening of the Ladies Business Club; to stimulate discussion, Erste Private Banking offered the women high quality Prosecco and chocolate from Slovak firm Lyra, one of the world’s top chocolatiers. Another touch that contributed to a pleasant atmosphere was a presentation of IOKO designer glasses by the brand’s owner, another successful Slovak woman, Dana Prekopová.

The introductory topic for the first regular meeting of the informal Ladies Business Club at the beginning of March 2017 was “Securing the Future of your Family and Business”. Although this has been long been a major issue in the private banking world, our clients pay it only passing attention, if at all.

“If entrepreneurs are not careful to secure their property throughout their life, they can lose a big part of it, or even all of it,” confirmed the business club speaker Dušan Tomka, a lawyer and founder of the law firm DT LEGAL, specializing in commercial and corporate law as well as topics related to the management and protection of private assets. Life can bring various situations when our assets get out of our control and even our families might have no legal means to take ownership of them.

These are the most important questions and answers that were raised at the Ladies Business Club on Securing the Future of your Family and Business

1. WHY SHOULDN’T EVERYTHING BE OWNED BY ONE MEMBER OF THE FAMILY

As time goes by, we hear of more and more sad cases where a manager dies at a relatively young age. “Such an event is unexpected, and young people do not make arrangements for it. That is a mistake,” Marta Ševčovičová, deputy director for sales management at Poisťovňa Slovenská sporiteľňa, told the Ladies Business Club.

Why? If an entrepreneur dies, their surviving family may find themselves in a situation where they are completely cut off from any funds for several months. “There is one crucial point here – not to have all the accounts, the mortgage, savings and insurance on just one name in the family,” said Dušan Tomka, a partner in the law firm DT LEGAL.

“When someone dies, the bank and the insurance company automatically block all their accounts. It makes no difference whether their partner previously had some joint ownership rights over the account,” the head of Erste Private Banking explained. The funds will only be released after succession proceedings. These can sometimes last longer than half a year.

2. WHY SHOULD YOU NEVER FORGET TO MAKE A WILL?

Making a will should be part of every continuity plan for your assets and your family. How many of us have thought about it at some time in our lives? Only a few. According to experts from Erste Private Banking and the legal community, not having a will can seriously complicate matters after a death, and not just for entrepreneurs. “A will determines the primary direction of inheritance proceedings. Children, as rightful heirs, cannot be excluded from an inheritance except through an act of disinheritance. On the other hand, if you do not want a spouse to inherit anything, this is can be done using a will,” Dušan Tomka explained.

He also talked about the importance of wills for the new “tradition” whereby more and more people live in a partnership without a wedding certificate. All three experts and speakers at the first informal Ladies Business Club agreed that from a legal point of view, this is a risky way of living together for partners who are not well prepared. Marriage has the advantage of being protected by law. In inheritance proceedings, a partner is often in the second or even the third line of heirs, which means that they cannot obtain all their partner’s property after death and that priority is given to higher ranking heirs, especially children but also siblings and parents.

“Few people are aware that after living together for a year a partner is entitled to a share of the estate of a deceased partner,” noted Dušan Tomka.

3. LIFE INSURANCE IS GOOD FOR EVERYTHING

“I strongly agree that a will is beneficial but it may not protect your business or your family after your death if you have debts,” said Marta Ševčovičová. “This problem can only be solved by life insurance.”

Slovenská sporiteľňa offers its clients life insurance under the “Život” (Life) brand. A further benefit of life insurance is that insurance is not itself (except in a few cases) covered by inheritance proceedings, which means that it cannot be divided amongst the heirs. The only person entitled to it is the person named as the beneficiary for payment of the whole sum in the insurance contract.

“We had a case where a client died and the family had no idea about his business, finances or debts. If the client had not had life insurance, the family would have had nothing to pay the debts with or provide for themselves,” added Dušan Tomka, partner from the law firm DT LEGAL, concerning the advantages of life insurance.

4. HOW TO PROVIDE FOR YOUR CHILDREN?

According to Michaela Kaňová, director of Erste Private Banking, entrepreneurs are increasingly interested in securing the future of their children during their own lifetimes. In her view, the division and gifting of assets can be a risk. “We advise parents to think carefully whether their children need a gift of money during the parents’ lifetimes. No one knows what will happen, whether, for example, a child of 18 will be able to manage a hefty sum of money and whether the child would not eventually choose a bad investment. Once we have given money away, it is very difficult to get it back,” warned Michaela Kaňová.

Her advice to clients is always as follows: write a will, tell your heirs who will get what, and introduce your children to us. “In this way, your heirs know who they should talk to at the bank if anything unexpected happens,” she explained.

The lawyer, Dušan Tomka, agreed with her and said that he would not recommend gifts of money before death either. “I have one recommendation I give to parents – not to give their children cash but to invest in their education, provided that they want to study at a prestigious university. Otherwise, they shouldn't see a penny.”

Marta Ševčovičová from Poisťovňa Slovenská sporiteľňa added that clients could provide for their children or grandchildren during their lifetime through life assurance. One of its advantages is that the client can decide at which age the assurance will pay out to the children or grandchildren as seed capital for life. She agreed with Michaela Kaňová’s view that children may not be mature enough to manage a large amount of cash at age 18.

Michaela Kaňová has seen negative results from gifting money in many family firms in Slovakia. “Statistics show that in our country only 15% of children take over a family business and 7% of grandchildren. We always advise clients to send their children to a different business to try their hand at working and getting by on a monthly salary. They need to learn the value of money from an early age,” concluded Michaela Kaňová at the end of the first Ladies Business Club organised by Erste Private Banking, of which she is the director.

What is Erste Private Banking?

The prestigious magazine, The Banker, ranks Erste Group amongst the best companies for private banking in Central and Eastern Europe. In Slovakia, Erste Private Banking manages assets with a value of EUR 800 million belonging to more than 1,500 clients.