The most important changes in the new Inheritance Act

| Insight

The new Inheritance Act enters into force on 1 January 2021, and will replace the current law from 1972. The most important change is pedagogical, as the law has a better language and a clearer structure. The simplifications, both in terms of language and structure, are made to make it easier to navigate the regulations on inheritance, also for those without a legal education. The new law also entails some material changes. This article will summarize the main points of these changes.

The new Inheritance Act enters into force on 1 January 2021. The law was passed on 15 May 2019 and replaces the current law from 1972.

The most important change is pedagogical, as the law has a better language and a clearer structure. The language has been simplified, and terms such as «landowner» and «legatee» have been replaced by the common term «heir». The simplifications, both in terms of language and structure, are made to make it easier to navigate the regulations on inheritance, also for those without a legal education. The new law also entails some material changes. This article will summarize the main points of these changes.

Children’s right of inheritance – statutory prescribed share
According to current law, two thirds of the assets of deceased constitute so-called statutory prescribed share inheritance to their children or grandchildren. This share cannot be freely disposed of in a will. The remaining third may be distributed as the testator sees fit. This stays the same. Until now, however, each child has not been able to claim more than 1 million in statutory prescribed share inheritance. For grandchildren, the limit has been NOK 200 000. This has been changed in the new law. Both children and grandchildren can now claim 15 G, but still no more than their share of two thirds of the deceased’s assets. Today, 15 G amounts to approx. NOK 1,500,000. The National Insurance basic amount is adjusted on 1 May each year. The limit for how much compulsory inheritance each child can demand will thus increase with inflation.

The current rules do not allow you to bequeath an asset to an heir if the value of the asset exceeds the heir’s prescribed share inheritance. This will now be possible, provided that the heir who receives the asset repays the difference between the asset’s value and the heir’s share of the prescribed share inheritance. The change gives the testator greater freedom to decide who will take over a leisure property. In addition, according to the new law, the testator may stipulate that an heir shall have the prescribed share inheritance distributed in cash.

The right to limit the testator’s disposal of the inheritance is also changed in the new law. Today, it is only permissible to place restrictions on the free inheritance, not on the compulsory partial inheritance. When it is deemed to be in the best interests of the heir, the testator may, in accordance with the new law, by will determine restrictions on the heir’s right of disposal over the prescribed share inheritance until the heir reaches the age of 25.

The surviving spouse’s right to retain undivided possession of an estate
According to the current law the surviving spouse may dispose as the owner of everything that is part of the undivided estate. This is continued in the new Inheritance Act. Previously, there was an absolute prohibition on giving away real estate while in possession of an undivided estate. This no longer applies. However, the right to give away gifts from the estate presupposes that the gift is not disproportionate to the total assets in the estate. In practice, this provision will mean that in the vast majority of cases it will still not be possible to give away real estate while in possession of an undivided estate. Whether a gift is disproportionate to the property in the estate requires a concrete assessment.

Formal requirements for a will
According to current regulations, the following formal requirements apply for a will to be valid: the will must be in writing, and signed by the testator. The will must also be signed by two witnesses who confirm the testator’s signature. Witnesses must be present at the same time and must know that the document is a will. According to the new law, two witnesses must testify to the signature by the testator signing the document or acknowledging the signature while the witnesses are present together or separately. Witnesses must know that the document is a will, and they must sign the document while the testator is present. The witnesses must still be present at the same time as the testator, but do not have to be present at the same time as each other. This simplifies previous rules.

Furthermore, the new law gives the King (in practice the Government) the right to issue secondary laws regarding digital creation of wills and requirements for digital wills to be valid. No such regulations have been proposed so far, and there is a debate about the security associated with the creation of digital wills.

Cohabitants’ inheritance rights
According to current rules, cohabitants do not inherit from each other, unless they have, have had or are expecting children together. If they have, have had, or are expecting children together, the cohabitant’s right to inherit constitutes 4 G. The cohabitant’s right to inheritance may be limited or extended by will. The right for cohabitants to retain undivided possession of the estate if the other one passes away, is currently limited. Only cohabitants who have, have had or are expecting children together retain possession of the undivided estate. Only the cohabitant’s common home and contents, car and leisure property served for common use may remain undivided. However, cohabitants are allowed to retain undivided possession of the full estate if this is stipulated in the will, or if the heirs agree. There was great anticipation about whether this would be changed by current legislation, so that cohabitants who had children together were given the same inheritance protection as spouses who had children together. However, this proposal was not followed up, and the current rules were continued. This means that cohabitants’ rights are still subject to rules on co-ownership and non-statutory law. It is therefore still very important for cohabitants to write a cohabitation contract and will.

Reduction and renunciation of inheritance
According to current rules, a distinction is made between the renunciation of future inheritance while the testator is alive, and the rejection of fallen inheritance after the testator’s death. In the new Inheritance Act, an overall regulation has been given, and both of the mentioned cases are referred to as renunciation of inheritance. One can give up all or part of future or fallen inheritance. Inheritance that has been renounced shall be distributed as if the heir had died before the testator. Today, a testator can decide to reduce the inheritance based on a gift that has already been made. This is changed by the new law. Under the new law, the recipient must be made aware, at the same time of receiving the gift, that this will result in a reduction of future inheritance.  This makes things more predictable, since the recipient will be able to reject the gift, if he or she does not want to accept that this results in a reduced inheritance.

Transitional rules and repeal of previous laws
The rules for inheritance and probate were previously regulated by the Inheritance Act of 1972 and the Probate Act of 1930. The rules are by the new Inheritance Act combined in one law, and the Probate Act is repealed from the same time the new Inheritance Law enters into force. The Probate Act’s rules on the division of common property in a divorce have been moved to a new chapter in the Marriage Act. Inheritance settlements that commenced before the new law enters into force will be finalized according to current rules. The new law applies to deaths that occur after 1 January 2021.