New inheritance law, is it coming soon?

We're entering a new year and I keep getting questions about what's happening with the new inheritance law. What are the changes? When will the law come into force? Here you get the first update of the year.

Almost eight years have passed since the Inheritance Act Committee was tasked with assessing the current Inheritance Act with a view to creating a new one. Five years have passed since the Inheritance Act Committee made its recommendation in NOU 2014:1. Fourteen years have passed since the Probate Act Committee was commissioned to come up with a new Probate Act. Twelve years have passed since the Probate Act Committee made its recommendation in NOU 2007:16. Just before the summer of 2018, the government presented its bill, Prop. 107 L (2017-2018), which brings together the Inheritance Act and the Probate Act in a new Act on Inheritance and Succession (New Inheritance Act). The bill is now awaiting consideration by the Storting.

In comparison, the last amendment to the Inheritance Act in 1972 also took a long time. The Inheritance Act Committee's recommendation was made in 1962, ten years before the Inheritance Act was adopted. When the Inheritance Act was last amended, it took three years from the time the government presented its bill until the law was adopted. It is currently uncertain when the new Inheritance Act will be considered by Parliament and when it will come into force, but it may already be wise to familiarise yourself with the proposed rules.

For the most part, the current inheritance rules are continued, and no drastic changes have been proposed to the current Probate Act. The amendment to the Probate Act is largely a linguistic tidying up of old and inaccessible legal text. The vast majority of probate law rules and principles are continued.

There are nevertheless some significant changes in the proposal for a new inheritance act. Most attention has been paid to the proposal to change the maximum amount for life heirs' compulsory partial inheritance. Partial inheritance is the part of the net assets reserved for the testator's heirs, i.e. children and their descendants. Today, the compulsory partial inheritance accounts for two-thirds of the wealth, and this solution will be maintained. This means that, in the same way as today, the testator can only dispose of one third of his or her assets by will. Under the current rules, the compulsory portion of the inheritance is limited in that the inheritance to each child's line amounts to a maximum value of NOK 1 million. The proposed legislation seeks to link the compulsory portion of inheritance to the National Insurance basic amount and that the maximum compulsory portion of inheritance will amount to 25 G for each child or each child's line. With today's basic amount, this means that the statutory inheritance for each child will be approximately NOK 2.4 million.

But what does this rule change mean for wills that are based on the current rules? Will the rule change lead to a revolutionary increase in speech about the New and Old Testaments?

For many people, the new inheritance law is unlikely to make much of a difference. For a testator who is childless, the change in the law naturally makes no difference.

If a testator has a spouse and several joint children, the spouses' joint assets must exceed at least NOK 5 million net before the new inheritance law affects what can be done.

If, on the other hand, a testator with larger assets and life heirs has written a will under the current rules, limiting the duty portion to NOK 1 million and disposing of other net assets, must a new will is drawn up. This is because the old will will be invalid for the part that violates the duty-sharing inheritance.

A transitional rule is proposed which, in simple terms, means that old wills are valid for one year after the law comes into force. However, if the testator dies later than one year after the Act enters into force, the new rules on duties will determine the scope of the freedom of testation. If the will is to be used as a basis, the disposition must therefore be within the free third based on the new amount limits. In order to ensure such transitional rules, the will must be drawn up before the new rules come into force.

It is also proposed that the testator should be able to distribute assets between the heirs to a much greater extent than at present. If the new rules are adopted, the testator will be able to stipulate in the will that a life heir is to receive his inheritance in cash and also stipulate that a life heir is to be able to receive items that exceed his/her share of the inheritance in return for paying the excess back to the estate (this is not permitted under current legislation).

When it comes to inheritance rights for spouses and cohabitants, the current rules will continue more or less unchanged. In this connection, it is important to realise that it will continue to be the case that only certain cohabitants have a slightly limited right of inheritance. Only cohabitants with children in common have the right of inheritance and the right to sit undivided. The Inheritance Act Committee's proposal to strengthen the inheritance rights of cohabitants has not been continued in the Government's bill.

New family constellations with my, your and our children make it relevant for more and more people to make a will. With the new Inheritance Act, the need for wills will not be any less than before. However, the proposal to raise the compulsory portion of inheritance will probably mean that many people will have less to dispose of.

Do you have questions about inheritance and generational change? Get in touch with us!