Inheritance Distribution

The distribution of an estate’s inheritance is commonly carried out through an agreement among the heirs. If the heirs cannot come to an agreement, it may be necessary to apply for a court-appointed estate administrator and distributor. In cases of amicable distribution, the process is faster and significantly more cost-effective compared to using an external estate administrator and distributor.

When representing the interests of a partially incapacitated heir, a substitute guardian is often required, and obtaining approval from the Digital and Population Data Services Agency is necessary for entering into a settlement agreement. Annia assists in drafting legally valid settlement agreements.

We help and guide in inheritance distribution

Our experienced lawyers provide assistance and guidance in drafting division documents and offer guidance in situations where an estate administrator has been appointed to the estate. If needed, we also serve as estate administrators.

10 questions about inheritance distribution

At the moment of the deceased's death, an undivided estate is created, which remains in effect until the distribution of the estate is concluded. The co-owners of the estate act jointly and equally in all matters. The co-owners of the estate include legal heirs, beneficiaries of a will, the surviving spouse, and secondary heirs. If there are no legal heirs, the estate will be inherited by the Finnish state. The surviving spouse does not inherit the deceased's property if the deceased has direct descendants.

The organization of the estate inventory declaration event is the responsibility of a close relative of the deceased, the person who is most familiar with the deceased's financial situation. Usually, this is the spouse or a child.

In the estate inventory, the deceased's assets and debts are listed, thus clarifying the estate's situation. The Tax Administration's website contains a list of the content and attachment requirements for the estate inventory. A copy of the estate inventory must be submitted to the tax authority within one month of the estate inventory event.

The estate inventory is prepared after a person's death. The estate inventory event must be held within three months from the date of death, and the estate inventory must be submitted to the tax authority within one month from the estate inventory event. The tax authority may grant an extension for valid reasons, but an application for an extension must be submitted to the tax authority within three months from the date of death.

The tax authority determines the inheritance tax after receiving the estate inventory by conducting a notional division of the inheritance. The tax is calculated based on the estate values indicated in the estate inventory, also taking into account the distribution deed. If the taxation is determined incorrectly due to incomplete or erroneous information about the deceased person's assets at the time of death, you can request a correction to the taxation. In such cases, the previously calculated inheritance tax amount may change.

Generally, children inherit from their parents, and the inheritance is divided equally according to the main division. The law protects children by guaranteeing them a statutory share. The law specifies certain situations where a child can be disinherited by including it in a will. However, the threshold for this is set high. Therefore, this may apply, for example, if the heir has intentionally and criminally deeply harmed the deceased or if the heir has consistently led a dishonorable or immoral life. Merely stating this in a will is not sufficient; these events must have actually occurred.

If there is no will, the inheritance goes to legal heirs as determined by law. A person can determine through a will who they want their property to go to. Inheritors can include individuals as well as legal entities such as companies, associations, or foundations.

Inheritance distribution can be carried out through amicable agreement distribution or, in contentious cases, through a distribution managed by an estate administrator and liquidator. The estate remains undivided until the distribution is completed. A distribution record or distribution agreement must be submitted to the tax authorities.

The estate comes to an end when the inheritance has been completely distributed. The actual distribution should ideally take place only after it has become legally valid. An unsatisfied shareholder can contest both the agreement-based distribution and the distribution carried out by the estate administrator. The time limit for contestation is six months from the completion of the distribution. Shareholders can also waive their right to contest, in which case the distribution becomes legally valid as soon as all shareholders have accepted it.

The actual distribution is usually carried out only after the inheritance division has become legally valid. Therefore, the fastest and most cost-effective route is to agree among the heirs that they waive their right to challenge. It's advisable to involve a lawyer in drafting the agreement for distribution.

Amicable inheritance distribution is done by an agreement

The co-owners of the estate can carry out the distribution of the inheritance according to their agreed method, if they reach a unanimous decision on the content of the distribution. This is referred to as a so-called agreement distribution or amicable distribution. A written agreement is drafted for the agreement distribution, and all co-owners sign the agreement. Agreement distribution requires unanimity, so even one dissenting co-owner can prevent the distribution. Distributing the estate amicably is the fastest and most cost-effective method. The significance of finding a settlement among co-owners plays a crucial role in reaching an amicable resolution. However, sometimes reaching an agreement among the heirs for the implementation of the inheritance distribution might prove impossible. Annia assists in drafting a legally valid agreement for the amicable distribution.

Contentious Estate Distribution
When an estate is contentious and co-owners disagree on certain matters, a settlement through an agreement is not possible. In this case, it is necessary to apply to the district court to appoint an estate administrator and/or a division of estate administrator, typically an attorney experienced in inheritance matters. The key criterion for selection is experience, rather than location, as remote participation in meetings is feasible nowadays. Even signatures can be arranged via mail, even if co-owners are scattered across Finland. However, electronic signatures are not yet accepted by authorities. Maria Puputti, an attorney at Annia, handles these tasks. In such a situation, the co-owner must first obtain consent from the proposed person for the task, ensuring there are no conflicts of interest. In this context, conflicts of interest mean that the attorney has not previously handled the affairs of any of the co-owners, as the person must be impartial and unencumbered in the matter.

In general, potential issues related to estate distribution often arise from disagreements among the co-owners of the estate. Settlement negotiations can lead to a good and effective solution in cases where the dispute hasn’t been prolonged. In situations of long-standing disputes, co-owners often no longer wish to act rationally, and the dispute becomes more of a matter of principle.

Reaching a consensus is a desirable outcome from various perspectives and is generally in the best interest of the co-owners. Agreement among the co-owners also supports a swift and smooth estate distribution process. A court-appointed distribution is often a greater expense for the estate compared to an amicable distribution. The longer the dispute continues, the more it takes a toll on the co-owners. In these situations, engaging in a conversation with an attorney is certainly a wise choice, as it provides the co-owner with a realistic understanding of the possibilities for carrying out the distribution, considering the unique circumstances of the estate.

However, estate distribution must be possible even if a consensus cannot be reached. The co-owners of the estate can apply to the district court for the appointment of a distribution administrator, who then conducts the distribution. This right is independent for each co-owner, and other co-owners cannot prevent the appointment. The distribution administrator acts as an impartial party, making necessary decisions along with the relevant practical follow-up actions.

If the deceased was married, the first step is to carry out the division of property or separation, depending on whether the spouses had a marital property agreement or not. Typically, a estate administrator is appointed for both the division of property and the distribution of the estate. The situation can become problematic if the appointment of the estate administrator specifies only the distribution of the estate. Interpreted according to the wording of the appointment, this would mean that the estate administrator cannot conduct the division of property. To avoid problematic situations, it is advisable to appoint the estate administrator specifically for both procedures. If the division of property has been neglected and years have passed since a divorce, it can become very difficult to ascertain the true situation of the estate later on. To prevent this, the division of property should be carried out as soon as possible after the grounds for division arise.

When the estate is contentious and the co-owners are in disagreement about a certain matter, it's not possible to reach an agreement through a settlement agreement. In such cases, it's necessary to apply to the district court to appoint an estate administrator and/or distributor, who is typically an attorney with extensive experience in estate distribution matters. Anniasta's tasks are managed by attorney Maria Puputti. The fee for the estate administrator and distributor is deducted from the estate's assets.

A single co-owner can independently apply for this at any point during the existence of the estate by submitting an application including consent to the district court. In this case, the co-owner must first request consent from the proposed candidate to ensure that there is no conflict of interest. Conflict of interest means that the attorney has not previously handled the affairs of any co-owner, as the person must remain impartial and unbiased in the matter. The key criterion for selection is primarily the experience, rather than the physical location of the office, as nowadays meetings can conveniently be conducted remotely. Even signatures can be managed through postal services if necessary, regardless of the geographical locations of the co-owners. Unfortunately, electronic signatures are not yet accepted by the authorities.

Please request consent to be appointed as the estate distributor here!

Please request consent to be appointed as the estate distributor here!

Before commencing the distribution of the estate, it is important for the estate administrator and distributor to ensure that the general requirements for the distribution are met. Among other things, the administrator must ensure that the estate has been settled and made ready for distribution, the estate inventory has been completed, the estate heirs have been officially summoned to the distribution process, and the marital property division (if applicable) has been conducted. Neglecting the prerequisites for the distribution process could potentially render the estate distribution invalid. When the estate administrator and distributor are the same person, the marital property division and estate distribution are usually addressed in the same document.

The primary responsibility of the estate administrator and distributor is to seek a settlement through negotiation among the estate heirs. If an agreement is reached at this stage, the administrator confirms the settlement, and the estate is distributed according to the terms agreed upon by the heirs, concluding the official procedure. However, if disagreements persist among the heirs and an agreement cannot be reached, the estate administrator and distributor will proceed with the distribution according to legal provisions, providing a legally justified decision.

Request the consent to act as the estate administrator and distributor here!

It can be considered that one of the most challenging tasks of the estate administrator involves resolving disagreements related to the inventory of assets. Often, these disagreements are channeled into the partition process between the heirs and the surviving spouse. The partition process can bring forth a significant number of interpretative questions, the resolution of which naturally takes time. Similar issues may also arise later during the distribution of the inheritance. If the relationships among the estate's heirs are strained, disputes over ownership rights can easily lead to prolonged inheritance divisions. It is also typical for unfounded claims to be presented during the inheritance distribution. Engaging professionals in the inheritance distribution process can significantly expedite and clarify the procedure.

If a co-heir in the estate is not capable of advocating for their own interests, their interests are represented by a guardian appointed for them in the inheritance distribution. The guardian can enter into an agreement regarding the distribution of the estate, safeguarding the individual's best interests. The law doesn't provide a clear answer as to when a distribution agreement can be considered in the principal's best interest, making these situations inherently open to interpretation.

The validity of an agreement concerning the content of the inheritance distribution can be disputed. The agreement may be invalid, for instance, if not all co-heirs were properly represented when the agreement was made. If the guardian has made an agreement on behalf of a co-heir, the estate administrator must assess whether the agreement made by the guardian is in line with the principal's best interests before proceeding with the distribution. Ultimately, the estate administrator must be able to provide reasoning for considering the decision acceptable.

When should inheritance tax be paid?

It can be argued that one of the most challenging tasks of the estate administrator is resolving disputes related to the inventory of assets. Disagreements often arise in the context of partitioning between heirs and the surviving spouse. Property partitioning can give rise to a significant number of interpretational questions, the resolution of which naturally takes time. Similar issues may also arise later during the distribution of the inheritance.

If tensions exist among the estate’s beneficiaries, disputes over ownership rights can easily lead to prolonged inheritance divisions. It is also common for demands to be made during inheritance distribution that lack legal grounds. Engaging professionals to assist with inheritance distribution can significantly expedite and clarify the process.

Renunciation of inheritance

It is not obligatory to accept an inheritance; one can renounce it either before the deceased’s passing or after. Renunciation cannot be partial; it must involve either accepting the entire inheritance or renouncing it entirely.

Renunciation can take place in a way that specifies where one’s share will go or who will receive it. If no substitute is designated, the situation is treated as if the renouncer had passed away before the deceased. In this case, inheritance taxes skip one generation and become the responsibility of the renouncer’s successors.

Alternatively, if renunciation occurs with a designated substitute inheritor, both the renouncer and the substitute inheritor become liable for inheritance taxes. Renunciation of an inheritance received through a will can also be partial. Renunciation is no longer possible once the inheritance distribution has already taken place.

How is the fastest, easiest, and most cost-effective inheritance distribution done?

  • Agree among the heirs on how the estate will be divided
  • Contact Annia and make an appointment
  • Submit all documents at once
  • Prepare all information about the inheritance distribution in writing and submit it in advance
  • Create a written inheritance distribution agreement at Annia
  • Sign the distribution agreement
  • Submit the distribution agreement to authorities and to the bank where any assets will be distributed
  • The estate comes to an end

How is a contested estate divided?

  • Contact Annia, either for assistance or to act as an estate administrator and distributor.
  • Apply for an estate administrator and distributor for the deceased estate.
  • Once the appointment is made, the estate management shifts to the administrator, relieving the heirs from dealing with practical matters jointly.
  • The estate administrator handles practical matters within the estate.
  • Arrange estate settlement meetings, potentially multiple.
  • The estate administrator settles the estate for distribution.
  • If no agreement is reached, the estate distributor divides the estate by providing a distribution solution.
  • Financial settlement to the heirs.
  • The deceased estate concludes.

Dissolution of Co-ownership of Real Estate

In the process of estate distribution or through other means, an individual may acquire a share of ownership in a property, such as a single-family house. If a co-owner no longer wishes to continue with co-ownership and the property cannot be divided into smaller sections through partition or division, they have the right to have their share of the joint property or object separated through distribution.

However, dividing a property is not always possible. In such cases, a co-owner has the right to seek the termination of the co-ownership relationship and the sale of the property through the agency of a trustee by submitting an application to the district court. A single co-owner can make the application alone, and the costs are shared among all co-owners in proportion to their ownership shares. The applicant covers the application fee. Generally, legal representation is sought, and upon ensuring no conflict of interest, the attorney grants consent to the request.

If the property can be divided in a manner that allows each co-owner to receive ownership shares corresponding to their ownership percentages, an application can be made to the National Land Survey of Finland to carry out the division of the property.

For further information, you can refer to the topic: “Properties | National Land Survey of Finland.”

Special Features of Farm Estate Distribution

If the estate includes a farm, questions arise about the fate of the farm and how it should be distributed. If the deceased has made a valid will regarding this matter, the farm will be divided according to the will’s instructions. If an eligible farm successor exercises their right to claim the farm as part of their inheritance, they must compensate other heirs or beneficiaries for their share of the farm in money. If there is no valid will, the farm can be distributed among the heirs through a negotiated settlement according to their wishes. In cases where there are two eligible farm successors who both want the farm’s share, the one with better professional qualifications for continuing the farm operation will be chosen as the farm successor. However, there are specific rules for the inheritance of a farm when there is disagreement among potential successors. Inheritance tax regulations also provide certain benefits for farm inheritance when the inheritor continues agricultural activities.

An eligible farm successor has the right to demand that the farm, along with its agricultural equipment, be included undivided in their share if the deceased’s farm or a part of it meets the legal requirements. The farm successor must have sufficient professional qualifications for conducting agricultural activities. The deceased’s farm must then constitute a viable farm, which means that the farm successor and their family can primarily sustain themselves from it. This applies even if a portion of the viable farm is part of the widow’s share, and the widow is the farm successor. Additionally, a requirement is that the widow and the successor enter into a cultivation agreement, confirming the farming arrangements for at least ten years from the estate distribution, either jointly or separately. The agreement period can be shorter if the widow agrees to transfer their share to the farm successor when the agreement period ends.

Continuing a farm or distributing it within an estate is always a complex situation. Even in amicable circumstances, it is advisable to reach an agreement and draft a written settlement agreement with the assistance of a legal professional. In such cases, our extensive expert services are available to meet your needs.

Inherited Cottage: Renouncing Co-ownership when Receiving a Cottage as Inheritance

Inherited Summer Cottage often becomes co-owned by two or more individuals as part of the inheritance distribution. Finding a solution to end this co-ownership is a common concern. Challenges typically arise when managing shared responsibilities, which may fall disproportionately on one co-owner or when the cottage is primarily used by one owner while all owners share the expenses equally. If co-ownership continues, it’s advisable to establish a management and division agreement, outlining the shared rules.

If co-ownership cannot be sustained, there are options to consider. Co-owners can agree to divide the property through a division agreement, triggering an automatic partition of the land into separate plots. Alternatively, the co-owners can choose to sell the property, and one party may buy out the others’ shares. In more complex situations, where no suitable solution is reached, the final option is to seek the termination of co-ownership, which involves selling the property.

It’s recommended to strive for an amicable resolution whenever possible. Often, one owner might be interested in purchasing the others’ shares. If none of the aforementioned approaches yield a satisfactory outcome, co-owners can pursue the appointment of a trustee to manage the jointly owned property or sell the shared summer cottage plot. In cases of disputes among cottage owners, they can apply for the appointment of a trustee to manage the property or sell the shared plot, distributing the proceeds among the owners according to their ownership proportions. In such situations, legal expert Maria Puputti can handle the duties of a trustee.

Property Valuation Package for Estate Inventory and Inheritance Distribution

We assist you in assessing your property. The estate’s assets must be valued at the time of the deceased’s passing. The Tax Administration usually determines the amount of inheritance tax based on the values in the estate inventory. Assigning monetary value to cash in the estate inventory is straightforward, but determining the monetary value of movable and immovable property can be more challenging. Disagreements can also arise among the estate’s heirs regarding these valuations, leading to disputes. Since the estate distribution might take a long time, it might be necessary to reevaluate the property’s value at the time of distribution.

Property should be valued based on its fair market value. Fair market value refers to the amount that would be obtained by selling the property. This approach aims to value the property considering the general price level. For example, real estate can be compared to similar properties in the same area and their prices. Usual personal items are often valued as negligible and sometimes even considered worthless. Valuation should be done with great care, and if there’s uncertainty, Annia can assist in the valuation process. In such cases, an external party evaluates the property, making the valuation neutrally acceptable as a basis for distribution. Property valuation significantly affects the content of inheritance distribution and taxation, so in uncertain situations, it’s advisable to contact our legal experts.