TR automatically receives information about a death once it has been registered with Registers Iceland, so relatives do not need to report it to TR. Payments to the individual are subsequently stopped.

Four to six weeks after the death, TR then informs the relatives about the estate settlement process, possible entitlements such as death benefits and child pension, and any potential obligations that may rest on the estate.

The final settlement of the deceased's estate with TR takes place once the deceased individual's confirmed tax return is available. The representatives of the deceased's estate or the heirs must ensure that the tax return is submitted to the Icelandic Tax and Customs. The settlement at TR can take place in the spring, autumn or November, depending on when the estate's tax return is available. Therefore, the length of time from the death until the final settlement with TR is available varies.

The settlement is carried out by calculating entitlements based on the confirmed income in the tax return and comparing those entitlements with what the individual was paid. TR's allowance is based on income plans that individuals complete themselves, but we at TR know that it can be difficult to estimate future income, e.g. wages, pension fund payments and capital income. Therefore, every year there is a group of individuals who either have a credit or are in debt to TR, and this applies to both deceased estates and individuals.

If a debt arises from the settlement of a deceased's estate, TR is legally obliged to collect the claim from the estate or the heirs. Debt payments can be spread over 12–36 months, and no interest or other collection costs are added. If the probate of the estate is concluded on the grounds of insolvency, the claim is not collected.

Further information on the rights and obligations of deceased estates towards TR can be found here: Information on the TR website about the settlement of deceased estates