Renunciation of inheritance and will

Tax planning through renunciation of inheritance

Various ways of renouncing inheritance and wills can influence the tax consequences that arise and, on the other hand, the channeling of tax liabilities beyond direct descendants of the deceased. The tax burden is thus divided into smaller fragments.

An heir can renounce the inheritance already during the lifetime of the deceased. However, a direct descendant cannot validly renounce his or her right of the lawful share during the lifetime of the decedent.

The inheritance can also be renounced after the death of the deceased. In this case, the renunciation is made without any compensation. In order to be tax free, it must be made sure that the heir has not made any enforcement decisions on the share of the estate. Regardless of the stage at which the renunciation is made, it must be done in writing.

Who will replace the heir who renounces the inheritance?

The heir who has renounced his or her inheritance will be replaced by his or her heirs according to the succession order (‘substitute heirs’). The person renouncing his or her inheritance cannot make any provision as to who will inherit in his or her place. The renunciation, the intention of which is to avoid the tax consequences for oneself, must be unconditional and must be made without making any enforcement measures on the share of the estate.

In many cases, it makes sense to renounce inheritance for tax purposes, as the tax burden is then passed on from one generation to the next. If there is more than one substitute inheritance, the renunciation also provides a benefit in the form of progression, as the inheritance tax rate is lower for smaller inheritances.

Naturally, it is possible to accept the inheritance and only then transfer it to the person of your choice. However, this is rarely advisable, as it leads to double taxation, at least in the case of transfers without compensation.

Tax planning by renouncing a will

In general, the principles for renouncing a will are the same as for renouncing an inheritance. The main difference between renunciation of an inheritance and renunciation of a will is based on the current case-law, which allows partial renunciation of a will without tax consequences.

The inheritance tax is only imposed on the beneficiary to the extent that he or she has accepted the will in case of a partial renunciation of the will. However, it is very important that the contents of the will are suitable for a partial renunciation as understood by the tax authorities.


If I renounce my will, who will take my place?

When a will is renounced, the circle of substitute heirs is determined in a way that is partly different from the case when an inheritance is renounced, because the succession order is based on the relationship of kinship.

Therefore, when renouncing a will, it is important to be precise about who will actually take the place of the beneficiary who is renouncing the will. If there is no family relationship between the testator and the beneficiary, there is a risk that the property in question will not pass to the beneficiary’s own heirs.

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