What are the challenges family members face when inheriting property?
When a loved one dies, it's not only the pain of bereavement, but also the inheritance and administration of the deceased's estate. Because of the mourning and ignorance of the legal nuances, many heirs are confused and do not know what rights they have over the deceased's property and what steps they must take to accept the inheritance. Rokas Puodžiūnas, a lawyer at AVOCAD, gives a brief overview of the essential nuances of inheritance law.
Inheritance is accepted in its entirety
According to the lawyer, it is important to know that, contrary to what most people may think, the estate of a deceased person often consists not only of tangible things (such as a car, a house, an apartment, movables), but also of intangible things (securities, patents, trademarks, etc.), some of the decedent's former rights (property rights, copyrights in literary, scientific and artistic works), and the decedent's property obligations (debts, other obligations).
Thus, after the death of the deceased, all the rights and obligations of the deceased pass to the heirs, so that the estate can only be accepted in full, and the estate cannot be accepted in part, for example only claims and tangible property are accepted, and debts are not accepted. If the heir decides to accept the succession, all rights and obligations shall pass to the heir, whether or not the heir was aware of them.
Succession under the law
There are two ways to inherit property:
- By law
- According to the will.
Succession by operation of law occurs when the deceased has not made a will or when the will or part of it has been declared invalid. The Civil Code establishes an exhaustive list of six lines of heirs who are entitled to inherit according to law. The law provides for the following lines of succession:
- The first in line are the deceased's children (including adopted children) and the deceased's children born after his death;
- Second in line are the deceased's parents (adoptive parents) and grandchildren;
- third row: the deceased's paternal and maternal grandparents, the deceased's great-grandchildren;
- fourth row: the siblings, great-grandparents and great-great-grandparents of the deceased on both the father's and mother's side;
- Fifth row: the children (nephews and nieces) of the deceased's brother and sister, and the brothers and sisters (uncles and aunts) of the deceased's father and mother;
- children (cousins) of the deceased's father and mother's brothers and sisters in the sixth row.
The lawyer points out that in the case of a succession by operation of law, the heirs of the higher order have priority to inherit the deceased's property in equal shares. The heirs of each lower succession inherit only if the heirs of the higher succession have not accepted the inheritance or are simply not available.
"The procedure could be used to simulate the situation. Suppose the deceased had three children, in which case each child would inherit 1/3 of the deceased's estate. If two of the children refused to accept the inheritance, the entire estate would go to the remaining child. The second heirs (parents, grandchildren) would inherit only if none of the deceased's children accepts the estate. It should also be noted that adopted children are equal to the deceased's children by descent and inherit according to the general procedure established for the children of the deceased," emphasises Rokas Puodžiūnas.
Spouse's inheritance
The spouse of the deceased is not listed in any of the rows, as the surviving spouse is not considered an heir. "However, this does not mean that the spouse has no right to the estate, the surviving spouse inherits under a special right together with the first or second heirs," says an AVOCAD lawyer. The aim is to ensure that the bulk of the estate goes to the deceased's children. Spousal succession:
- If the spouse inherits with the heirs of the first succession, he/she inherits 1/4 of the inheritance, provided that there are no more than three heirs excluding the spouse.
- If there are more than three heirs of the first succession, the spouse inherits equally with the other heirs.
- If a spouse inherits with second heirs, he/she is entitled to half of the inheritance.
- If there are no heirs of the first and second succession, or if they do not accept the inheritance, then the heirs of the lower succession do not inherit and the surviving spouse inherits the whole inheritance.
"So, if we look again at the situation before, where the deceased had three children and add a spouse, then under the rules mentioned above, the 3 children and the spouse would each inherit exactly one-quarter of the total estate. The spouse would also inherit a quarter of the estate if only 1 child decided to accept the inheritance," Rokas Puodžiūnas points out.
Succession by will
Succession by operation of law does not take place if a will has been made. A person who decides to make a will has the right to bequeath his or her property to any person. These may be persons belonging to the heirs at law as well as persons not belonging to them.
According to the lawyer, it is important to be aware that a testator is not completely free to leave his entire estate to third parties and to completely forget the rest of his family members. In cases where the testator excludes immediate family members who need support from the estate, such persons are entitled to a mandatory share of the estate.
According to the case-law of the Supreme Court of Lithuania, a family member wishing to exercise the right to a mandatory share of the inheritance must fulfil all these conditions:
- Must fall within the circle of persons defined, i.e. the person is the deceased's child/adopted child, spouse, parent (condition defining the circle of subjects);
- the person claiming the mandatory share of the estate needs maintenance at the time of the deceased's death (the maintenance condition);
- the testator has not left property to that person in the will, or has left less than half of the share that would have been reserved for the person in the succession under the law (condition for the size of the mandatory share).
The court must assess the person's financial situation as a whole at the date of the succession and find that he or she is not in a position to meet his or her basic needs on the basis of his or her income and assets.
Acceptance of an inheritance
The succession can be accepted either by filing a declaration with a notary or by taking actual possession of the property. Since proving that the succession was accepted by actual possession would require going to court and proving that the succession was owned, used or disposed of as one's own. A simpler way is therefore to apply to the notary of the place of succession.
The application must be made within 3 months of the deceased's death. The law allows an heir who has missed the time limit for the acceptance of the succession to have it restored by applying to the court if the delay was due to serious reasons.
The application for the acceptance of the succession is accompanied by the documents that prove the heir's right to inherit (death certificate, documents proving kinship, etc.).
The notary checks with the Register of Wills whether a will has been made. If a will has been drawn up, the notary shall fix a date for the publication of the will and shall notify the known heirs and other interested persons thereof.
The succession certificate is issued to the heirs three months after the date of the succession.
According to the lawyer, the estate also includes the deceased's former liabilities (debts). Therefore, there may be cases where the debts of the deceased exceed the value of the estate, in which case the heir is liable for the deceased's debts with all of his or her personal assets. It may seem that the only way to avoid such a situation is to refuse or not to accept the inheritance. However, the heir does not always know the exact amount of debts and the number of creditors before accepting the legacy. Therefore, the heir may decide to accept the succession on the basis of an inventory, thus limiting his or her liability for the debts of the deceased to the assets inherited.
In order to accept the succession according to the inventory, the heir must express his or her wish to do so in the declaration of acceptance of the succession. When a person applies to a notary for the acceptance of the succession, the notary should explain the forms of acceptance and their legal consequences. If there are several heirs and at least one of them has accepted the succession in accordance with the inventory, all the heirs are deemed to have accepted the succession in accordance with the inventory.
The notary issues a writ of execution to draw up an inventory of the estate, which the heir must submit to the bailiff within two weeks. The bailiff must draw up the inventory within one month, or within three months in the case of multiple locations or multiple creditors of the deceased.
Inheritance of a sole proprietorship
According to an AVOCAD lawyer, the law provides for certain specificities of inheritance when the object is a sole proprietorship. A sole proprietorship inherited by several persons has a priority right to receive in kind the heir who is willing and able to manage the inherited enterprise. In this case, the ability of the person receiving the enterprise in kind to settle accounts with the other heirs is also taken into account. The notary must ascertain the willingness and ability of all the heirs to manage the inherited enterprise when issuing the certificate of succession. If no agreement can be reached, the dispute would have to be settled in court.
In order to accept the succession properly, it is therefore advisable to first contact the notary of the place of the succession, which is determined by the last habitual residence of the deceased. The address of the notary's office can be found at: https://www.notarurumai.lt/. In the event of disputes between heirs concerning the succession or if there are doubts about the legality of the notary's actions, it is necessary to seek the assistance of lawyers.