Death does not ask for your birth year or income level. It is indifferent to social status. It can arrive unexpectedly and always leaves behind one crucial question: who will succeed to my property, my businesses, my obligations? It is never too early to consider who will receive what you have built and accumulated during your lifetime.
This newsletter outlines key issues that every entrepreneur, investor, and in fact, every person should carefully consider.
What Is Included in a Succession Estate?
The succession estate consists of both assets and obligations. Assets may include immovables, vehicles, money in bank accounts, pension fund units, shares in companies, securities, stock options, and personal property such as artwork and jewelry.
If the deceased was married under the joint property regime, the succession estate may also include funds held in the surviving spouse’s bank account. Under intestate succession, the spouse is a successor in any case, even if a separation of property agreement existed. The proprietary relationship agreed upon in marriage does not affect succession rights.
The estate also includes obligations, such as bank loans, credit card debts, tax arrears, and installment payments. Thus, the succession estate may be a mix of valuable assets and burdensome obligations.
Some obligations may not be known at the time of death. A positive credit register is being developed, which will contain information on all consumer credit agreements. This will allow notaries and bailiffs to access information necessary for succession proceedings and estate inventory, including undisclosed liabilities.
Who Are the Successors?
If no will is made, legal successors are the children and spouse or registered partner of the deceased. In the absence of children, the successors are the parents and their descendants. If none, then grandparents or uncles and aunts. If no relatives exist, the local government becomes the successor.
Many do not know that children and spouse succeed in equal shares, but the spouse is entitled to at least 25%. If there are no children, the spouse and parents of the deceased each receive 50%. This can result in the estate being divided with in-laws. Only when there are no parents or their descendants does the spouse succeed to the entire estate.
By making a will, anyone can designate their own successors and determine who receives what. It is also possible to allocate specific items to certain people and leave the remainder to legal successors. It is advisable to consult a notary or lawyer to find the best solution.
How Does Succession Proceed?
Upon a person’s death, a notary must be contacted to initiate succession proceedings. In Estonia, one has three months to renounce succession; if this right is not exercised, the succession is deemed accepted.
Renunciation must be declared before a notary. If the estate consists only of obligations and succession is renounced, it passes to the next legal successors. The entire line of successors must renounce the estate before it passes to the local government, who will then manage the obligations.
Sometimes it may be more reasonable to accept a problematic estate, initiate an estate inventory, and declare bankruptcy of the succession estate. Renouncing is not always the best solution.
The notary determines the circle of successors and issues a succession certificate, which lists who has succeeded and in what share. The notary does not establish the exact composition of the estate nor distribute it. Successors may enter into an agreement on the division of the estate before the notary.
How to receive assets from the Succession Estate?
First, a succession certificate must be obtained. If there are multiple successors and the estate is undivided, actions must be taken jointly. To access funds in a bank account, successors must contact the bank.
If the succession estate includes shares in private limited companies, these may be transferred to the successors after the certificate is issued.
If shares are recorded electronically (as in public limited companies), successors must visit the bank where the securities account was opened to have the securities transferred to their own accounts.
Changes in land registry ownership can be made electronically.
In the case of pension fund units, the successor may choose to withdraw the funds or merge the second or third pillar units with their own pension savings. Only if the units are redeemed for cash is income tax payable.
Foreign property (e.g., in Wise, Revolut, or similar accounts) involves more complex succession processes. In such cases, it is strongly recommended to consult a legal expert.
What Is Estate Inventory?
We strongly recommend arranging an inventory of the succession estate. This is performed by a bailiff and establishes the assets and liabilities of the deceased. This is especially important when there are many obligations involved.
If succession is accepted without an inventory, successors are liable with their own assets for any discovered debts. Estate inventory helps limit liability. If obligations exceed assets, the bankruptcy of the succession estate can be declared. Unfortunately, debts do not disappear upon death. Proper inventory and bankruptcy help resolve them.
Why Make a Will?
If no will is made, succession proceeds according to law. A will allows the testator to make different arrangements—for instance, excluding debtors from the circle of successors or allocating specific property to specific people.
How to Protect the Estate from Debtor Successors?
In Estonia, there are over 85,000 individuals with at least one payment default. If a debtor succeeds, their share may be seized and sold at auction by a bailiff. This could result in strangers acquiring parts of your home or business.
To protect other successors and avoid conflicts, it is worth considering the exclusion of debtors from succession via a will.
What If a Business Owner Dies?
Again, a notary must be contacted to begin succession proceedings. These generally take 1–3 months. If succession takes longer, the county court may appoint an administrator of the succession estate or temporary management board member.
Alternatively, someone (e.g. an accountant) can be authorized in advance to carry out certain transactions.
Once the succession certificate is issued, successors can register changes in the commercial register and decide how to proceed with the business. If minors are among the successors, court approval is required to sell shares.
If there are no children, the spouse or parents of the deceased will succeed. Are they prepared to manage a business? These are questions worth considering in advance.
What If the Successors Are Minors?
Minors can succeed under both intestate succession and by will. A testator may exclude minors from receiving certain assets (e.g., company shares), which might complicate company governance.
However, if the testator deprives a dependent close relative of their legal share, the minor may claim a compulsory portion (equal to half of what they would have received under intestate succession).
Excluding minors entirely may lead to disputes. While it’s sometimes recommended to leave everything to a spouse, their future decisions and new relationships may lead to outcomes contrary to your intentions.
Court involvement in transactions with minors serves to protect their interests.
How Is the Estate Divided?
Division of the succession estate determines which items, rights, and obligations go to each co-successor. Division follows the shares determined in the succession certificate and considers the fair market value at the time of division.
Estate division can be agreed upon; if one successor receives a greater share, they compensate the others. If no agreement is reached, the estate can be auctioned, and proceeds divided in proportion to each successor’s share.
Avoiding difficult decisions during your lifetime can burden successors with disputes and forced sales. Proactive planning can help prevent this.
Conclusion
Succession affects us all. Estonia has many debtors, blended families, and diverse forms of property—fertile ground for future disputes. But these can be avoided by facing the issues early and consciously.
Succession is not only a legal concern but a deeply human and practical one. Let’s talk about it—before it’s too late.
