Prepaid inheritance

An individual (a will-be heir) who wishes to dispose of part or all of his or her assets before his or her death may do so by way of advance payment of inheritance.

The effect of advance payments inheritance is based on the time when inheritance tax is paid. This rule should be borne in mind by heirs when making advance payments before the end of the year. It is not sufficient for the district commissioner to endorse the report before the end of the year. The heirs must also pay the tax before the end of the year.

The process

A will must be completed with a prior inheritance payment and a signed will be submitted to the district commissioner where the person in question is domiciled. The report must be signed by both the deceased and the heirs. If the heirs are under the age of 18, their guardians must sign the report, having obtained the approval of the supervisor of guardians (district commissioner).

The report must also specify what assets are being paid out as inheritance.

The following documents may be submitted with a genetic report:

• for real estate (if property is being delivered in inheritance).

• will (if a letter heir is being paid out inheritance).

• The consent of the supervisor of guardians (district commissioner) if the heir is under the age of 18.

• Documentation confirming the value of the asset, for example: a summary of securities assets and vehicle valuations.

Once a district commissioner has received a will, he shall review it, endorse it and levy inheritance tax. The heirs shall receive a notification of the imposition of inheritance tax on Iceland.is. The letter indicates where the inheritance tax can be paid. The due date for inheritance tax is 10 days from the time notification is sent to the mailbox of Iceland.is and the deadline one month later. If inheritance tax has not been paid on the due date, penalty interest shall be calculated from the due date. Once inheritance tax has been paid, the district commissioner may confirm a declaration of division on the delivery of property to a prepaid inheritance. It can subsequently be registered and the heirs become registered as owners of the property. A declaration of division shall be submitted to the district commissioner in whose district the property is located. The declaration must be in the original and a registration fee must be paid.

• Who can prepay inheritance?

• Legal heirs entitled to inheritance under the Act of Inheritance.

Letter heirs entitled to inheritance in accordance with a will.

Costs and tax

Inheritance tax is 10% of the value of the property being delivered. For more information on the tax base of inheritance tax, see

Debts or costs of calculating inheritance tax may not be deducted from inheritance payments made in advance.

The calculation of inheritance tax on the payment of inheritance in advance is based on the time when the district commissioner endorses the inheritance report.

Tax freedom does not apply to prepaid inheritance. Full inheritance tax must be paid on the item delivered.

The heir is liable for the payment of inheritance tax on an individual basis and on an individual basis, subject to the restriction that no one may be collected more than corresponds to his total inheritance.