Debts and Estate Inventory – Investigating the Deceased's Debts
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Investigating debts
For the estate inventory, all of the deceased's debts must be investigated as of the date of death. Debts include bank loans, credit card balances, consumer loans, tax debts, guarantee liabilities, and other commitments. Balance certificates are requested from banks, showing both account balances and remaining loan principal. Tax debts are investigated from the Tax Administration. Housing company loan shares and rent debts must also be taken into account.
The estate notifier must report all known debts in the deed truthfully. Concealing debts can lead to serious legal consequences.
Shareholders' debt liability
The main rule of the Code of Inheritance is that estate shareholders are not personally liable for the deceased's debts. The estate is liable for its debts only with the estate's property. A significant exception is personal liability under Chapter 21, Section 2 of the Code of Inheritance: if the estate inventory is neglected or deliberately false information is given in the deed, a shareholder may become liable for the estate's debts with their own assets.
Insolvent estate
When the estate's debts exceed its assets, the estate is insolvent. The estate inventory must still be conducted normally. In an insolvent estate, it is worth considering applying to the district court for an estate administrator — the administrator handles debt payments and distributes any remaining assets. A public summons is a tool used to request creditors to report their claims. Unknown creditors' claims expire if they are not reported within the public summons deadline.
Debts in the deed
All of the deceased's debts are recorded in the deed itemised: bank loans with principal and interest, credit card debts, tax debts, care costs, housing company loan shares, and other obligations. Funeral expenses and estate inventory costs are also recorded as estate debts. Debts are deducted from the estate's gross assets, resulting in net assets on which inheritance tax is assessed.
Funeral expenses and estate debts
Reasonable funeral expenses are estate debts that have priority over other debts. This means funeral expenses are paid first from the estate's assets. Funeral expenses include the coffin or urn, transportation, blessing and memorial service, burial plot, and memorial. Estate inventory costs and estate administration costs are also estate debts. These expenses reduce the inheritance tax base, so it is important to report them in the deed.
Frequently asked questions
Are the deceased's debts inherited by relatives?
In Finland, debts are generally not inherited by relatives personally. The estate is liable for the deceased's debts with the estate's assets. Shareholders do not have to pay the deceased's debts from their own assets, provided the estate inventory is properly conducted on time. The exception is a situation where a shareholder has neglected their estate inventory duty — in that case, they may become personally liable for the estate's debts pursuant to Chapter 21, Section 2 of the Code of Inheritance.
What happens if the estate is insolvent?
If the estate's debts exceed its assets, the estate is insolvent. The estate inventory must still be conducted normally. Shareholders do not need to pay the excess from their own assets. Debts are paid from the estate's assets in the order they fall due and equally among creditors. If necessary, a public summons can be applied for, in which creditors are requested to report their claims by a deadline. Appointing an estate administrator is recommended for insolvent estates.
How are the deceased's debts investigated for the estate inventory?
The deceased's debts are investigated by checking bank account balances and loans on the date of death, requesting balance certificates from all banks, investigating credit card and instant loan debts, checking tax debts with the Tax Administration, investigating potential guarantee liabilities, and mapping other commitments such as lease agreements. Under the Code of Inheritance, the estate notifier must report all known debts in the deed truthfully.
Are funeral expenses counted as estate debts?
Yes. Reasonable funeral expenses are estate debts that are deducted from the estate's assets in the deed. Funeral expenses include reasonable costs related to the coffin or urn, transportation, blessing ceremony, memorial service, and burial plot. Estate inventory costs are also estate debts. These expenses are deducted from the estate's gross assets when calculating the net inheritance, which reduces the inheritance tax amount.
Can a creditor collect from an estate shareholder?
A creditor can collect only from the estate's assets, not from shareholders' personal assets. Exceptions are situations where a shareholder has personally guaranteed the deceased's loan or if the estate inventory has been neglected. Additionally, if a shareholder has used estate assets for their own purposes before paying debts, they may be required to return the assets to creditors. Creditors have the right to request the appointment of an estate administrator to protect their interests.
Read also
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The estate inventory must be conducted within three months of the deceased's death. Learn about calculating the deadline, consequences, and requesting an extension.
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