Succession Handling (4/5): The Inheritance Tax Return

The notary now has all the required documents to officially draft the inheritance tax return, which is crucial to settle the succession. This step, generally long awaited by the heirs, is the time of detailed calculations that will allow the notary to determine the exact value of the estate. 

Fourth step: The inheritance tax return

Well, what is actually being calculated?

The actual value of the estate, meaning what will be shared between the heirs according to their inheritance rights. In other words, the net assets of the succession. The amount of inheritance tax as well as notarial fees (if you seek the help of a notary) will also be based on this value. 

 

How is it calculated?

As explained earlier, this value amounts to the total net assets, meaning the balance between all the assets owned by the deceased and his liabilities. To calculate this, the notary will first, in the presence of the spouse, distinguish between the deceased’s own assets and those shared by the pair. Indeed, the succession that is shared between the heirs, including the partner, is comprised of only half of the assets. The other half belongs to the spouse. Please note that if the total value of the inheritance does not exceed a certain amount, the spouse may be exempted from inheritance tax.

Then, the notary can add up all the assets (movable and immovable) and subtract all the liabilities, which also include other fees, such as hospital or funeral fees.

Be careful: it might be tempting to underestimate the value of the assets to try and reduce the amount of inheritance tax, but it is a risky move. Indeed, in case of attempted fraud, the tax administration has two to ten years (depending on the type of asset) to claim extra taxes (and impose fines). A mechanism, called “preliminary appraisal”, helps you avoid mistakes, be they intentional or not. Indeed, this mechanism appoints an experienced appraiser to officially assess the value of the estate. Yet, the heirs have to pay for such a service. Therefore, if the total value of the inheritance is low, it might not be useful to make use of this service. Please note that should a mistake occur, you have the right to correct it, even if the tax inheritance return has already been filed, as long as the 4-month deadline has not expired. Otherwise, you will have to file a request for regularisation, which will still lead to your paying extra taxes and a fine. 

 

That's not it!

Finally, the notary will review all deductible items such as donations that have been received within 15 years prior to the decease. This step also allows the notary to check if the heirs inheriting from parts of the minimal share are not being disadvantaged. If so, the notary may reduce the share of those who “received too much” to allocate it to the disadvantaged ones, following certain rules. 

Check out all the articles from our series "Effective Succession Handling":

  1. Succession handling (1/5): The Notary
  2. Succession handling (2/5): The Inheritance File
  3. Succession handling (3/5): The Act of Heredity
  4. Succession handling (4/5): The Inheritance Tax Return
  5. Succession handling (5/5): Coming soon