Estate Planning: How Paying Inheritance Tax Can Burden Heirs and Beneficiaries in Finland

Paying inheritance tax can be a significant burden, especially when dealing with immovable property that cannot be easily sold. A survey commissioned by insurance company Lähi-Tapiola reveals that many Finns struggle to pay the inheritance tax they owe. Over half of respondents have either received or expect to receive an inheritance worth 20,000 euros or more, which requires payment of inheritance tax.

For some, taking out a loan is necessary to cover the costs of inheritance tax. In fact, almost one in ten respondents reported that they had to or planned to take out a loan to pay the tax. Selling property or using their own savings were also common methods used to cover the costs. However, when the inheritance includes immovable property that cannot be sold, such as a shared apartment where one party remains living, heirs may face severe financial challenges. The inability to sell the property can force heirs to sell their own assets or take on debt to cover the tax owed.

The Tax Administration reports that the amount of unpaid inheritance taxes subject to enforcement has been increasing year by year. Last year, nearly eight million euros in inheritance taxes were subjected to enforcement compared to four million euros in 2019. Additionally, the number of people paying inheritance tax has risen significantly, with an average tax payment of about 10,000 euros. While a recent reform has extended the payment period for inheritance taxes, high interest rates on unpaid taxes may discourage many from using this option.

Overall, paying inheritance tax can be a challenging and costly experience for many individuals and families in Finland. As such, it is essential for those facing these financial burdens to explore all available options and seek professional advice before making any decisions regarding their financial future.

Inheritances are not just monetary assets; they often come with emotional attachments and responsibilities towards loved ones left behind. Therefore, it is crucial for heirs and beneficiaries alike to ensure that their wishes are carried out while also managing their finances effectively.

One solution could be seeking help from professionals who specialize in estate planning and probate services. They can guide you through the process of settling an estate while minimizing your tax liabilities and maximizing your assets’ value.

Another option could be considering alternative forms of investment or diversifying your portfolio if you have inherited immovable property that cannot be easily sold.

Overall, paying off an inheritance tax can seem daunting at first glance; however, with proper planning and guidance from professionals in estate planning and probate services or financial advisors specializing in asset management strategies like diversification into different asset classes or investment options like real estate funds or private equity funds could provide viable solutions for those facing this burden.