At its core, selling the forest property of a death estate is very similar to any sale of a forest owner’s forest property. Usually, a sales order contract concerning the property is concluded with a real estate agency and the agency manages the selling and bargaining process until it is time to sign the deed of sale. However, selling a death estate’s forest property includes many things the parties of a death estate must take into account even before signing a commissioning agreement.
A death estate selling a forest property is referred to as selling the property of an undistributed death estate. The estate inventory deed includes a value marked for the forest, but the broker will re-evaluate a price for the forest property that is based on the value at the time of the sale. Often, the case is such that the estate inventory deed was drafted some time ago and the prices for forest properties and the market situation have changed.
The property owned by the death estate has been appraised to its fair value at the time when the estate inventory deed was being drafted. Often, the situation might evolve so that the value of the forest property becomes higher in the sale of the property than it was estimated to be when the estate inventory deed was being drafted. In a situation like this, attention should be paid to the fact that in many cases the inheritance tax rate is more moderate than the capital gains taxation. When a death estate’s capital gains are calculated, the property value used in the inheritance taxation is considered to be the acquisition cost of the property, meaning that it can be justifiable, in certain cases, to apply for a change to the base for the property’s inheritance taxation. An appeal to change to the base for an inheritance tax must be submitted to the tax rectification committee within three years of end of the year of the death, and proof of how the value of the property was appraised incorrectly in the inheritance taxation must be attached to the application. However, if the deceased died before 2017, the period for requesting that the inheritance taxation be rectified is five years, counting from the year the calculation of the inheritance taxation was performed.
An undistributed death estate is a separate taxpayer. When selling a forest property to a party outside the death estate, the death estate must pay capital gains tax for the sales profit from the sale of the forest property. It must be noted that profit gained from transferring assets belonging to an undistributed death estate is income of the death estate. The parties to the death estate do not declare the death estate’s capital gains (or losses) in their own taxes. When calculating the amount of the death estate’s capital gains (or losses), the asset value used in the inheritance taxation is used as the acquisition cost of the forest property, or alternatively, the presumed acquisition cost can be used, depending on which of them is more favourable for the taxpayer in terms of taxation.
Selling a forest property owned by a death estate begins like any other sale; by negotiating the sales order contract with a real estate agency. On behalf of the death estate, the matter is managed by the death estate’s administrator who can be one of the inheritors or, in some cases, an executor of the estate appointed by a court. Selling a forest property belonging to a death estate always requires the written consent of every party to the death estate. Another important matter that must be clarified at the very beginning of the process is who the parties to the death estate are. The broker can take care of this issue on the behalf of the death estate by requesting the estate inventory, the deceased’s complete extract from the personal register and other possible information needed to find the inheritors. The broker can also enquire about a possible deed of partition, a will left by the deceased, or the deceased’s marriage settlement agreement.
If an executor has been appointed for the death estate, the written consent must be signed by both the inheritor and two qualified witnesses. Selling a death estate’s property always requires the consent of all the parties to the death estate, and no individual party to a death estate can, for example, get a permit from a court to sell the property.
Once the death estate administrator has obtained the parties’ consents for selling the property, a commissioning agreement can be signed. The commissioning agreement is signed by either the death estate’s administrator authorised by the other parties or an executor appointed by a court.
The next steps in the process of selling a forest property, such as sales brochures, marketing, replying to the buyers’ enquiries, and showings of the property, are managed by a Metsätilat broker. After the marketing period, the broker presents the offers received to the administrator of the death estate. The administrator (together with the other parties) selects from the purchase offers presented by the broker the one that is the best for the death estate.
Once the most suitable buyer has been selected, the broker begins the preparations for the conclusion of the sale – by drafting a deed of sale, negotiating with the parties involved the time and place for the transaction for the property, and obtaining a public purchase witness for the conclusion of the sale – in other words, making the arrangements for the sale of the property.
Once the selling process for the property owned by the death estate has progressed to the conclusion of the sale, the property sale will be closed with the same protocol as other commissions. The broker ensures that the authorisation given to the death estate administrator by all the estate parties also covers negotiating the terms of the sale and signing the deed of sale and, if this is the case, the administrator shall represent at the conclusion of the sale all the parties to the death estate in a seller capacity. With the authorisation, the administrator is qualified to sign the legally valid deed of sale and the buyers can be assured that they will get the registration of ownership for their acquisition.
Selling a death estate’s forest property is a very simple process, if all parties are unanimous about selling the property. If among the parties there is disagreement about selling the property, any party is then entitled to demand, at any point, a court to appoint an executor to examine and distribute the death estate – this also includes the option of selling the forest property owned by the death estate before the death estate is distributed.
Selling a death estate’s forest property includes many such details that need not be examined in this article. The sale of a forest property owned by a death estate should definitely be given for a broker to manage as, due to their profession, a competent broker knows how to reliably manage all the statutory aspects of the selling process.
