Inheritance is not mandatory. By renouncing an inheritance, it can be passed directly, for example, over a generation and save on inheritance tax.
A benefit can also arise from the fact that if the deceased's estate is divided among several heirs, inheritance tax is reduced. A parent can renounce their inheritance in favour of their own children.
Inheritance tax is a progressive tax.
How is renouncing an inheritance done?
You need to be careful when disclaiming an inheritance to ensure it's done correctly for tax purposes.
You can either waive your statutory inheritance completely or not at all. Partial waiver is not possible. Nor can the beneficiary of an inheritance decide themselves who the inheritance goes to; instead, the waver's share passes directly to whoever would have been entitled to the inheritance if the waver had died before the deceased. In practice, if you have children and waive your inheritance, the inheritance will pass to your children.
The law stipulates that one may not act in any way regarding an inheritance before renouncing it. This means exercising the owner's rights, for example, selling property or participating in the division of an inheritance.
However, the performance of statutory estate management actions belonging to the heir, such as participating in the estate inventory, is not considered to be an acceptance. Most often, renunciation is carried out in conjunction with the estate inventory, where a note is made in the inventory document produced during the estate inventory. At the same time, a genealogical investigation must also be ordered for the person renouncing the inheritance, so that their closest heirs are known.
The estate inventory is sent to the Finnish Tax Administration and, based on it, inheritance tax is levied on the heirs. Therefore, it is not levied on those who renounce their inheritance.
Article drafted by the AdvocateTuula Rainto, Asoianajotoimisto Amos. You can always call him free of charge, tel. 010 299 5090. You can see our price list Here.
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