Inheritance Law in Denmark
Inheritance Law in DenmarkUpdated on Friday 03rd March 2023
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Inheritance in Denmark is governed by a special set of laws, while foreigners living in the country and those that have property in Denmark will also be subject to international inheritance law. The Inheritance Law in Denmark is mainly based on the principle of domicile.
The experts at our law firm in Denmark can help you with all matters related to the inheritance tax in Denmark, and the proper distribution of assets.
What are the laws governing inheritance in Denmark?
The Danish Inheritance Act is the source of all issues related to the treatment of inheritance and the distribution of the estate after a testator has passed away. The first chapters if this Act specifically treats the problem of distributing assets, when the deceased leaves descendants and when there are no direct descendants. According to law, if there are no children, the surviving spouse will receive all of the assets of the deceased.
According to law, an inheritance tax and an estate tax apply in Denmark when the assets are being distributed to the heirs. One of our lawyers in Denmark can give you complete information on the inheritance tax and how it applies to different types of inheritance.
Who is entitled to inheritance according to law?
The distribution of assets in Denmark is made according to the class of heirs. There are three classes with the first one including the surviving spouse and the direct descendants of the deceased. If the testator, the one leaving behind the assets, has children who have passed away before him, then the grandchildren will take the place of their parents in the line of succession.
The list below highlights the main situations that can occur when the individual did not leave a will:
- Married: the inheritance will go entirely to the spouse if there are no children; if the individual has children, then the spouse will receive half and the children the other half, irrespective of their number.
- Unmarried beneficiary class 1: the child or the grandchildren are the ones included in this first class;
- Unmarried beneficiary class 2: the parents the brother or sister and nephews/nieces are included here, in this order;
- Unmarried beneficiary class 3: the maternal and parental grandmother or grandfather, the maternal and paternal uncle or aunt are the last ones who can inherit; cousins are not entitled to inheritance.
The assets received in this manner are subject to inheritance tax in Denmark and the rates are different for children, as opposed to all other heirs. Our team details these tax matters below.
Individuals who wish to know more about how their assets may be distributed if they are unmarried can reach out to one of our lawyers in Denmark for more information as well as an evaluation of their case based on their particular family situation. One should keep in mind that the family constellation is important for inheritance matters and the only legal matter in which one can control who receives his assets is by drawing up a will. This legal instrument has the main advantage of allowing the individual to control how much he will be able to financially support a chosen family member or perhaps a child from another relationship if he is married, there are no children from this final marriage, and the assets will legally be attributed to his remaining spouse. These issues can be handled with a will, as presented below.
What is the situation of cohabitants for inheritance purposes?
The inheritance law speaks primarily in the case of married individuals, however, those who are cohabiting at the time of death can still be subject to a number of provisions for the manner in which the assets they were sharing will be distributed. For example, two individuals can draw up wills through which they inherit from each other, in whole or in part, as if they were spouses.
Relevant for this purpose is the administration of estates Act, according to which:
- the surviving cohabitant can take over the former joint residence and the household goods if he or she pays the cash value of the deceased’s estate;
- a condition is for the two individuals to have lived together in the joint residence, and to have had a marriage-similar relationship for two years prior to the death of the estate holder;
- another possibility is for the couple to have lived together in the joint residence and to have had a child or to have been expecting a child together.
It is useful to note that the cash payment value will be calculated as per the probate valuation of the estate. Our team can help you with general information about the calculation method and what you can expect as the surviving cohabitant, as opposed to surviving spouse.
For the purpose of the administration of estates act, it is also useful to keep in mind that the term joint residence does not cease of the parties were subject to a temporary stay in another dwelling or in an institution. If a will is drawn up, and the surviving cohabitant inherits estate under this document, the inheritance will take place as per the will and the individual will be paying any excess amount after the probate valuation.
In the situation in which a cohabitant and an heir wish to take possession of the same asset, the cohabitant has a prior right. What’s more, a child of the deceased is entitled to the possession of a certain asset if that asset has special sentimental value. All of these situations apply to assets that the testator has disposed of in the will.
How can a will be helpful?
Individuals may establish a different distribution of assets, apart from the one described by law, if they draw up a will de Denmark and explicitly state the manner in which their estate is to be distributed.
This approach can be useful in many situations as the will is a legal document that will provide the basis for a lawful, alternate distribution of the assets. There are two types of wills that can be used for this purpose:
- the notarized will: drawn up and signed in front of a notary in Denmark; it is recorded and it automatically disclosed upon the individual’s death;
- the witness will: this document is signed by two witnesses (who do not have financial interests); it does not have the same validity as the notarized one and thus it is easier to contest it in court.
The most commonly used will is the one signed before the notary, given the fact that it is the type of which cannot be easily contested in court. For this purpose, the help of a lawyer in Denmark, such as an inheritance specialist from our team, will be needed for preparing the document. It is common for the client to work with the attorney in order to include the desired elements of the will, and then it will be singed in front of the Danish notary. A fee applies for this procedure and the notary services and the role of the notary is to witness the signing and confirm the fact that the testator has the mental capacity to execute the will as per his or her own free will.
Denmark has a national register of wills for those that are executed by a notary. This means that this form of a will is registered and that is will be retrieved as needed upon the death of the testator.
One particular situation is that of an emergency will for inheritance in Denmark. In limited cases, a document that was not provided for in the ordinary form can be used as a testamentary disposition. The mandatory condition is to be able to show that the testator was, indeed, in a situation that prevented the signing of a will in the usual form. In some situations, such as in case of suicide, the final letter of the individual may be taken into account. Because these cases are very particular, we encourage those interested to reach out to our lawyers to find out more details.
The simplest method in which an individual can draw up a will is when this document only concerns personal effects and household items. In this case, there is no need for a notarized will, and it does not have to be signed by two witnesses. However, the scope of this particular type of will is very limited as it cannot include valuable objects, for example, paintings. However, a main will can be drawn up before a notary and a secondary document, signed by the testator and properly dated can be attached to the will. The second document will refer solely to personal effects and household items that do not fall under the category of assets formally distributed in a will.
If the testator wishes to revoke a previously concluded will, he will do so by drawing up a new will. If indications are made on the original document (crossing certain parts) it will not be considered a valid change.
Individuals should note that in the event of divorce, the will concluded by one of the spouses to the benefit of the other spouse will no longer be valid (the divorce revokes the will).
Our team of lawyers can provide you with more information on how these two types of wills should be used. One should keep in mind that according to the law there is an indefeasible portion of the estate that cannot be freely attributed under a will (the portion reserved for the spouse or heirs, when married). However, this legal document will allow you to distribute the remaining portion as per your wishes.
The individuals included in the will shall be subject to the inheritance tax in Denmark.
In addition to inheritance law matters, our team can also answer questions about taxes in Denmark, tax liability, and other important compliance issues for companies and individuals. If you are looking for professional accounting services, our team can help you with bookkeeping, annual financial reporting, tax compliance, payroll and more. Contact our accountants in Denmark for more information.
The will can be helpful in the following situations:
- when the individual is not married but would like for his or her domestic partner to receive an inheritance (and thus be financially secure);
- when the individual has children from previous marriages and would like for them to receive more than the law prescribes;
- when the individual has no legal heirs (spouse or children) but he/she would like to include other individuals for inheritance such as children-in-law, for example, cousins or former partners as well as perhaps an association or organization;
- when the individual has a large property and wishes to control the inheritance, especially in the case of minor children.
One of our Danish lawyers can help answer any questions related to a particular inheritance situation. Including if you are a foreign entrepreneur unsure of how the Danish assets will be passed on.
The inheritance tax in Denmark
Two main taxes, the estate duty and the inheritance tax, are relevant when discussing the manner in which distributed assets are to be taxed once they are claimed by the successors. To these, the gift tax can also apply when the deceased (the donor) has chosen to use this method for a beneficiary.
Below, our Danish lawyers list these tax rates:
- 15% or 36.25%: this is the value of the inheritance tax, imposed on net values that exceed DKK 301,900; this is also the value of the estate tax (for which the spouse is not liable);
- 15% or 31%: the gift tax when the said gift exceeds DKK 67,100;
- 51%: the maximum rate at which gifts may be taxed for individuals who are non-family (considered ordinary taxable income);
- 0%: there is no inheritance tax between spouses and no gifts tax between close family members.
If you need particular information on the taxation of inheritance, as well as personalized legal counsel, please reach out to our attorneys who specialize in tax matters and the provisions set forth by the Danish Ministry of Taxation.
A particular situation concerning inheritance can take place when a person living in Denmark receives inheritance from a family member who resides not in the country, but abroad. In this case, there is no tax or duty on the value of the inheritance received from the family member abroad unless this inheritance includes property in Denmark, fittings located in Denmark or assets that are related to a permanent establishment in the country. If this is the case, the tax will apply as per usual it is payable on the value of the assets in Denmark. The value of the inheritance will be included in the beneficiary’s assets.
Other issues to consider
Those who are interested in inheritance should know that the EU rules on inheritance and succession do not apply in case of Denmark, as the country has chosen to opt out of these cross-border inheritance provisions. This also means that the European certificate of succession is not issued for Danish heirs, legatees or executors and estate administrators. Their rights in other EU countries are governed by a different set of procedures and, therefore, in many situations, the Denmark will retain estate administration powers for cross-border inheritance. However, it is possible for the EU Cross-Border Succession Regulation to have influence on inheritance in select circumstances that include, but ate not limited to, determining the “last habitual residence” of the deceased and thus determining the division schemes and the competent courts. Habitual residence can be determined by assessing certain circumstances such as the tears spent by the deceased in a particular State, in the years preceding his or her death. Asking for specialized legal aid, such as the services provided by the experts at our law firm in Denmark, is recommended for international succession by Danish citizens.
There are special provisions that may apply in case of inheritance for tenancy matters. For example, on the death of a tenant, the tenant’s surviving spouse is entitled to continue the tenancy. When the tenancy was unmarried, the person with whom he or she has cohabited for at least 2 years before the date of the death can continue the tenancy.
Compensation for death liability
When the death occurred as a direct result of another party’s negligence, the person liable for the death will pay for the reasonable funeral expenses as well as the compensation to the individuals who have lost their provider as a result of the death. The deceased’s work in the home as a provider is taken into consideration when calculating the settlement.
Our team of lawyers in Denmark can provide you with complete information on the Liability and Compensation Act, useful for calculating the value of the wrongful death compensation. In many cases, the compensation for the spouse or cohabitant for the loss of his/her provider can be 30% of the compensation the deceased may have received if he or she would have been compensated for complete loss of earning capacity after the accident. This compensation has a minimum value that is approximately 655,000 DKK and our team can provide you with more details and the calculation method, according to your particular case.
Trusts and foundations for asset management
High-net-worth individuals can opt for asset management planning by using certain instruments for inheritance in Denmark. We advise those interested to seek specialized assistance from an asset management team as well as a legal expert, such as our team of lawyers in Denmark.
Succession planning can be prepared by using an investment vehicle in the form of a foundation. Denmark is not a jurisdiction in which a trust can be incorporated in the traditional sense, however, a foreign trust can be recognized as a legal entity (and thus be subject to taxation and the rules that apply in the country). When a foreign foundation is used, it will most commonly be recognized as a foundation under Danish law.
Private foundations can be incorporated in Denmark and these are legal entities that are taxed separately from their founder. The assets placed in a foundation are not affected by the rules for forced heirship and matrimonial property, meaning that for those investors or entrepreneurs who prefer to use an investment vehicle, the foundation can be a suitable option that will allow them to direct their assets in a manner that they see fit.
Discussing matters related to inheritance is useful for all individuals, irrespective of status or the amount of one’s wealth. Our team understands that this can be a delicate matter, especially when your family situation is a particular one or when you are interested in drawing up a will that will change the manner in which the estate is disposed of. You can contact our Danish law firm for complete information about the Inheritance Law and any other legal issues.