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Average inheritance rises to 80K in Finland

Estimates of net household worth suggest that Finnish residents inherited slightly over 80,000 euros on average in 2016, up from around 20,000 in the early 2000s.

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Image: Ismo Pekkarinen / AOP

Finland's state-owned number cruncher Statistics Finland estimates that two years ago, people over 65 in Finland held net assets between 150,000 and 200,000 euros on average.

"If we take this data as our starting point, then we could roughly estimate that the average net worth of an estate would be between 160,000 and 180,000 euros," says OP Bank's legal services manager Sampo Muotka.

"In a typical situation, there are two children. If a 160,000-euro inheritance is split between them, that means they would both inherit 80,000 euros. Of course, we have to remember that situations vary greatly in real life," Muotka says.

No tax on estates worth less than 20K

Inheritance for what the Finnish Tax Administration refers to as "natural heirs or last will and testament beneficiaries" is tax free for estates valued at less than 20,000 euros. The percentage increases from there, for instance, from 7 percent for estates valued between 20,000 and 40,000 euros to 13 percent for estates valued between 60,000 and 200,000 euros, up to a maximum of 19 percent for estates exceeding one million euros in worth. Taxation is more severe in case of remote relatives or those with no family connection at all.

The tax authorities don't have data on the size of average estates in Finland, but the government supplied some figures when it was planning changes to the current laws on inheritance tax in the country.

The latest data is from 2013, when just under 60 percent of people inheriting money received less than 20,000 euros.

"The percentage of people inheriting less than that minimum taxable amount has likely fallen a bit, in other words, more people are inheriting over 20,000 euros this year," says the Finnish Tax Administration senior advisor Jarmo Salminen.

Five years ago, one-quarter of people inheriting estates received between 20,000 and 50,000 euros, while just over one-tenth received between 50,000 and 100,000 euros. This means that the inheritance of over 80 percent of Finnish residents was under 50,000 euros in 2013.

Very few people inherit estates worth more than one million euros in Finland. In 2013, just 180 Finnish residents were recorded as doing so.

More net worth, fewer kids

There may not be a lot of millionaires, but average net worth in Finland is definitely growing.

"The baby boomers have become more prosperous, for example, and now have more assets than their parents did," says Taneli Lalluka, a tax expert with the Finnish Tax Administration.

Families are also having fewer children, which has led some people to split their inheritance between their children and their grandchildren, for example.

"Even though the number of children is falling, the last will and testament distributes the inheritance to a broader scope of beneficiaries," OP Bank's Muotka says. "The lion's share of the estate is left to the children, for example, but the rest is divvied up to the grandchildren in 10,000 euro or 15,000 euro shares, for instance."

He says that people these days are better aware of inheritance and tax policies in Finland, so they spend more time and energy planning how their estate should be distributed. They are also more likely to use some of the money they have saved, instead of passing it all on to the next generations.

As the housing market grows increasingly imbalanced, regional differences in estate worth are also becoming more pronounced.

"The worth of real estate and housing company shares has risen strongly in some areas and dropped off in other parts of Finland. This is reflected in assessments of net worth," says the Tax Administration's Salminen.

Typical assets are homes and a bit of savings

Statistics Finland data reveals that the net worth of Finnish households – the total sum of their financial assets and liabilities and other non-financial assets – have improved continuously since 2008.

According to 2016 figures, this net worth is still primarily comprised of homes and vacation properties, along with some assets like cars or boats and forest or land ownership. For some households, this also includes stock market shares, deposits, shares in mutual funds, and pension savings.

"A deceased person in Finland typically owns their home, a summer cottage, a car, a few shares on the stock exchange and has saved a little money," Salminen says.

"But it is becoming more common for people to save and invest, which means people are inheriting more investment assets. That's the direction we're moving in," says Muotka.

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