Stocks and Investments in Estate Inventory
· 2 min read
Investigating investments
For the estate inventory, all of the deceased's investments must be investigated: listed stocks, fund units, bonds, ETFs, investment insurance policies, and other securities. Book-entry account information is requested from the account manager bank or securities broker. Fund units are investigated through the fund company or asset manager. Any cryptocurrencies, peer-to-peer loans, and other alternative investments must also be investigated.
Regular investment transactions visible in the deceased's bank statements can help identify investment targets.
Stock valuation
Listed stocks are valued at the closing price on the date of death. The closing price can be found from the stock exchange's public data or from the balance certificate provided by the account manager bank. Unlisted share valuation is based on the company's net worth, or net asset value. The Tax Administration calculates a mathematical value for unlisted shares based on the company's financial statement data. If the yield value materially differs from the net asset value, their average is used. The number of shares, unit price, and total value are recorded in the deed.
Fund units and ETFs
Fund units are valued based on the unit value on the date of death. The unit value is obtained from the fund company's daily price announcement. ETFs are valued at the stock exchange price using the same principle as stocks. The name of each fund, number of units, and value on the date of death are recorded in the deed. A balance certificate is ordered from the fund company or account manager showing all of the deceased's fund units and their values.
Book-entry account in the estate
The deceased's book-entry account transfers to the estate's management after death. Personal online banking trading rights are closed, and the shareholders manage the account jointly. Selling securities requires all shareholders' consent. An estate administrator can sell securities to cover the estate's debts. A balance certificate of the account's status on the date of death is requested, showing all securities and their values.
Investment taxation
In inheritance taxation, investment values are calculated at the fair market value on the date of death. When the estate or heir later sells inherited investments, capital gains are calculated from the difference between the sale price and the inheritance tax value. The inheritance tax value thus serves as the acquisition cost. This means that value increases after the date of death are taxable capital gains, while value increases before the date of death are already accounted for in inheritance taxation. The deemed acquisition cost can be used if it is more favourable.
Frequently asked questions
How is stock value determined in an estate inventory?
Listed stock value in an estate inventory is determined based on the closing price on the date of death. The closing price is obtained from Helsinki Stock Exchange or other marketplace data. If the date of death is a trading day, that day's closing price is used. If the date of death falls on a weekend or holiday, the previous trading day's closing price is used. The value of unlisted shares is determined based on the company's net asset value or yield value according to the Tax Administration's guidelines.
How are unlisted shares valued in an estate inventory?
Valuing unlisted shares is more complex than listed stocks. The Tax Administration primarily values unlisted shares based on the company's mathematical value, i.e., net asset value, calculated from the company's net worth. If the company's yield value significantly differs from the net asset value, the average of the net asset value and yield value is used. In practice, the company's latest financial statements and balance sheet values serve as the starting point. The company's financial statements are attached to the deed to support the valuation.
What happens to the book-entry account after death?
The book-entry account transfers to the estate's management after the owner's death. The account manager (bank or securities broker) closes personal access rights and account management transfers to the estate. The estate shareholders can jointly decide on the account's management. Trading requires all shareholders' consent unless an estate administrator has been appointed. A balance certificate of the account's status on the date of death is requested for the estate inventory.
How are fund units reported in the deed?
Fund units are reported in the deed at their value on the date of death. The number of units in each fund and the unit value on the date of death are recorded. The value is obtained from the fund company or the bank managing the investments. ETF fund values are determined by the stock exchange price, like stocks. A balance certificate is requested from the fund company showing the number and value of units on the date of death. It is also advisable to determine the acquisition prices of fund units for potential future capital gains calculations.
Read also
How is inheritance tax determined based on the estate inventory? Tax classes, exempt portions, tax tables, and deductions clearly explained.
How are bank accounts handled in an estate inventory? Learn about account closure, balance certificates, access rights, and estate bank accounts.
How are insurance policies handled in an estate inventory? Learn about reporting life insurance benefits, savings insurance, and property insurance in the deed.