Death and inheritance rights: what should you do?
When someone dies in Luxembourg, their death must be reported to various organizations and their estate must be settled. Here is some more information on this subject.
What to do in the event of a death in Luxembourg?
Reporting a death to the municipality where the death occurred
In the event of the death of a loved one, it must be reported within 24 hours to the municipal authority where the death occurred, with the medical certificate provided by the doctor who certified the death.
The death can be reported by a relative of the deceased or by the funeral home contacted by the deceased's family.
Other documents must be provided: the deceased's family record book and/or all identity documents, a certificate of burial or interment in the case of burial, or a medical certificate of non-violent death in the case of cremation.
The local authority will draw up the death certificate and issue a burial or cremation permit.
Administrative procedures in the event of death
Copies of the death certificate must be provided to various organizations:
- Banks. In the event of death, you must report the death of the person to the banks holding an account in the person's name. The banks will take all necessary measures to freeze the accounts pending the settlement of the estate. Please note that this also applies to joint accounts and safe deposit boxes.
- Health insurance. You may be eligible for compensation for funeral expenses.
- Death benefit fund
- Pension fund
- The deceased's employer and beneficiaries are entitled to special leave in the event of death.
- Insurance company if there is life or death insurance
- notary for the establishment of the estate
- Consulate or embassy of the deceased's country of origin
- SNCT if the deceased owned a vehicle registered in their name
- Registration, property, and VAT authorities in connection with the inheritance declaration.
Declaration of succession in Luxembourg
A declaration of succession must be drawn up with the Registration, Domains and VAT Administration within six months of the death.
The death certificate issued by the municipality, the notarized deed in the case of a marriage contract, and a cadastral extract in the case of real estate owned by the deceased must accompany the inheritance declaration.
In the event of death, who inherits in Luxembourg?
When a person residing in Luxembourg dies, their entire estate and assets become subject to succession. An order of succession determines who inherits and how much.
The heirs will have to pay inheritance tax, which is calculated differently depending on the status of the heir and the nature of the assets transferred.
Inheritance law and legatees in Luxembourg
Like its European counterparts (except Denmark, Ireland, and the United Kingdom), Luxembourg signed an agreement in 2015 stipulating that the deceased may choose in advance the inheritance law that will apply to their estate in the event of death: the country of residence or the country of nationality. In the absence of an expressed wish, the inheritance law of the country of residence applies.
When the deceased had established their last principal residence or the seat of their fortune in Luxembourg, the succession applies as indicated in the Luxembourg order of succession, in the absence of a will.
The beneficiaries may or may not be residents of Luxembourg.
Luxembourg order of succession
In Luxembourg, individuals may designate their heirs by will, subject to a reserved portion. In the absence of a will, heirs are designated in the order of succession established by Luxembourg law.
1st order of succession in Luxembourg: descendants, children of the deceased
The children of the deceased (or their descendants by representation in the event of the prior death of one of them) inherit in equal shares. Regardless of their status (legitimate, illegitimate, adopted, or natural), they exclude all other heirs except the surviving spouse. Children are compulsory heirs and cannot be disinherited .
2nd order of succession in Luxembourg: the surviving spouse
The surviving spouse enjoys a privileged status. In the absence of children, they inherit all of the deceased's assets. However, they may be excluded from the succession by will.
If there are children, and unless there is a specific provision for a "special disposable portion between spouses," the spouse may choose to inherit the entire usufruct of the marital home and furnishings (if he or she was a joint owner). In this case, the children benefit from bare ownership of this property and full ownership of the rest.
The spouse may also opt for a share equivalent to that of the children, i.e., a minimum of 1/4 of the estate.
Third order of succession: the parents and collateral relatives of the deceased
In the absence of children and a surviving spouse, the parents and collateral relatives of the deceased are compulsory heirs.
They inherit the assets, with each parent receiving one quarter and the remainder being shared between the siblings or their representatives. If there are no collateral relatives, the parents inherit everything.
Fourth order of succession in Luxembourg: the deceased's ascendants
In the fourth order, the deceased's ascendants inherit half from the maternal side and half from the paternal side.
The closest ascendant inherits everything. If one branch is absent, everything is devolved to the other branch.
Fifth order of succession: the collateral relatives of the deceased
In the fifth order, the closest collateral relative from each branch,
maternal and paternal, who inherit the deceased's property, with each branch receiving half. The succession goes back to the fourth degree, bearing in mind that if one of the branches is absent, the entire estate passes to the other branch.
6th order of succession in Luxembourg: the State
In the sixth and final order, the State will inherit the deceased's estate in the absence of any other heirs.
The designated heirs may accept the inheritance as is or subject to inventory (statement of assets and liabilities), contest it, or renounce it.
Do you need cross-border advice? Consult a law firm specializing in cross-border issues.
What are the transfer duties on death?
Inheritance tax for a deceased person residing in Luxembourg
Estate assets for a deceased person residing in Luxembourg
Transfer duties are calculated on the net value of the deceased person's estate, i.e., movable property owned in Luxembourg or abroad and immovable property located in Luxembourg.
Inheritance tax on real estate located abroad depends on the inheritance law of the country in question. Movable property located abroad may, under certain conditions, be subject to inheritance tax in the country where it is held, depending on the nationality of the deceased.
Liabilities (debts of the deceased) will be deducted from the tax base.
Calculation of inheritance tax for a deceased Luxembourg resident
The heirs must pay inheritance tax to the Luxembourg government, regardless of whether or not they are residents of Luxembourg.
Inheritance tax on assets acquired abroad is subject to the tax and inheritance laws of that country.
In the case of direct lineal descent or ascendance, the estate in Luxembourg will be exempt up to the legal share. In the case of a will, for example, the extra-legal share will be taxed at 2.5% or 5%, depending on the circumstances.
Similarly, inheritance between spouses is not taxable in Luxembourg if the spouses or partners have children together. Otherwise, the inheritance will be taxed at 5%.
Inheritance between collateral relatives is taxed at between 6% for the legal share and 15% for the extra-legal share.
Beyond these specific cases, inheritances are taxed at between 9% and 15% maximum.
Inheritance tax for a deceased person who is not a resident of Luxembourg
In the case of a deceased person who is not a resident of Luxembourg, inheritance tax will be levied by the Luxembourg government on real estate located in Luxembourg, regardless of whether the heirs are Luxembourg residents or not.
In all cases, make sure you are well informed about your personal situation in the event of death with regard to your country of residence, your country of nationality, the residence of your potential heirs, and the location of the assets to be transferred.
For more information on inheritance tax in Luxembourg, visit guichet.lu.
Certain products, such as life insurance, allow assets to be transferred to the beneficiaries of the policy without incurring inheritance tax. These products are also very attractive financial savings products for expatriates. Contact your bank or insurer directly for more information. They will be able to advise you.
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