The debts of the estate.
Inheritance tax is calculated on the net taxable asset. In order not to pay too much inheritance tax, it is therefore important to also consider the debts in the estate. These are determined as they exist on the day of death. This can be justified in detail, for example with invoices, expense reports, etc., or work with lump sums (see below).
What debts are we talking about?
The debts of the estate pass to the heirs upon acceptance of the estate, except for the funeral expenses. This concerns the debts that were incurred or incurred before the death and that still exist at the time of the death. The debts must also be certain and final. If the deceased was jointly and severally liable with another person for a certain debt, the creditor will be able to recover the debt in full from the estate, which in turn can demand the contribution of that other person. For the calculation of the liabilities, only the part that the deceased had to bear in the end counts. You cannot deduct debts covered by insurance.
Funeral expenses.
Funeral expenses are part of the liability of the estate and are therefore deductible to arrive at the net taxable amount. However, you should not overdo it. The tax administration accepts expenses that are appropriate to the size of the estate and proportionate to the social situation of the deceased, which is of course a rather subjective matter. Also not all costs associated with the funeral count, for example no mourning clothes from the family or transport costs for those present may be deducted.
Debt subject to conditions.
Soms ontstaat er een schuld onder opschortende voorwaarde, dat wil zeggen dat de schuld pas effectief is bij het vervullen van de voorwaarde. Daarom kan u de schuld pas als een deel van het passief van de nalatenschap zien wanneer de voorwaarde is vervuld. Mocht bij het realiseren van de voorwaarde het passief groeien en er minder erfbelasting dan eerst berekend verschuldigd is, kan u via een bijvoeglijke aangifte een deel terugvorderen. Bij een schuld onder ontbindende voorwaarde bestaat de schuld wel bij het overlijden en maakt deze deel uit van het passief, ze is met andere woorden aftrekbaar. Bij het realiseren van de (ontbindende) voorwaarde is het alsof er nooit een schuld was. Dit kan leiden tot bijkomende erfbelasting, die u dan kan regelen via een bijvoeglijke aangifte.
Disputed guilt.
If there is still discussion about a certain debt, which in other words is not yet certain and final, you cannot deduct this debt. It can only become part of the liabilities of the estate when there is an (amicable) agreement or a court decision. If there is only discussion about the size of the debt, you can make a calculation based on a preliminary estimate.
Tax debts.
You can immediately include the debts that the deceased still had in personal income tax, even if there is no official registration at the time of the death. If you wish to await the official settlement, you can still work through an additional declaration in the inheritance tax, in order to recover a part if necessary.
For certain taxes (certain municipal or provincial taxes, property tax) or for debts that cover a period of an entire year, you must make a settlement so that only the period up to the day of death is deducted.
Maintenance fees.
For maintenance payments, you must distinguish between maintenance payments that are a personal obligation, which stop upon death, as opposed to deductible maintenance obligations that are charged to the estate, eg. in the case of a needy surviving spouse or needy parents of the deceased.
Working with lump sums.
You do not have to keep track of everything accurately or settle it if you work with a fixed cost. There is a general lump sum for the debts that is indexed annually. For the 2021 tax year, this is 1638.30 euros. There is also a specific lump sum for the estate of a person who was married under the community of property regime: EUR 3276.60 (amount for assessment year 2021), to be divided by 2. If you opt for the specific lump sum, you cannot invoke the general lump sum. There is also a lump sum for the funeral costs: 6553.20 euros (for tax year 2021), but you can only invoke this if no funeral insurance intervenes.
Importance of listing the debts.
It is natural that you pay sufficient attention to the liability, because that can seriously reduce the final inheritance tax. But that does not apply to everyone, only to the legal heirs and general legatees. After all, special legatees and donees do not contribute to the liability.
Any questions?
Please do not hesitate to contact the tax specialists!