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Inheritance from a parent: how is it settled? Is a family foundation a good solution?
Inheriting from a parent often entails numerous formalities, including tax settlement. Find out what steps to take to settle the inheritance correctly and avoid unnecessary costs.
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Tax exemption for inheritance from a parent
In Poland, people inheriting from close relatives can benefit from an important tax exemption under Article 4a of the Inheritance and Gift Tax Act. It exempts the acquisition of property or property rights by immediate family, including spouses, children, grandchildren, parents, siblings, stepchildren, stepfathers and stepmothers. To obtain the exemption, the inheritance must be reported to the competent tax office within six months from the date the court's inheritance decision becomes final or an inheritance certificate is registered.
When is an inheritance report not required?
In some circumstances, reporting the inheritance is unnecessary. There is no need if the value of assets received from the same person in the past five years did not exceed PLN 36,120. Reporting is also not required if the inheritance is acquired on the basis of a notarial deed; this also releases heirs from submitting extra documents.
How do you file an SD-Z2 report?
To report an inheritance and obtain the exemption, complete form SD-Z2. If it includes property, submit the form to the tax office for the property's location; otherwise, to the office for the deceased's last place of residence. Documents may be delivered in person, by post or electronically through e-Tax Office.
What documents are needed?
The SD-Z2 form should be accompanied by documents confirming what was inherited (for example money, a car or property), the relationship to the deceased (court decision or inheritance certificate) and any debts attached to the estate (for example a land-registry extract showing a mortgage). It is also worth including documents proving expenses for the deceased's treatment, care and funeral if not paid from the estate.
A family foundation as a succession planning tool
A family foundation is becoming an increasingly popular succession-planning option. It lets families manage assets effectively and pass them to future generations. It can protect the family's interests and assets against uncontrolled division.
Its main advantage is the ability to collect and manage assets that remain with the foundation instead of being divided among heirs. This prevents fragmentation, a common problem in traditional inheritance. A foundation can also provide family members with regular financial support under the founder's instructions, allowing control over how future generations use the assets. A well-planned family foundation can also bring tax benefits and protect all parties' interests.
When establishing one, consult a lawyer or tax adviser to ensure all procedures are handled properly and the foundation meets its goals.
If you found this article interesting, explore our tax advisory services and read how we can help you:
Summary
Settling an inheritance from a parent requires knowledge of the law and completing formalities that can exempt heirs from tax. File the right documents with the tax office on time to avoid unnecessary costs. Family foundations, a relatively new legal option, can seem complicated, especially their accounting and management. The Tax Coach team offers services in this area. Our specialists will gladly help you understand family foundations and provide support in running them.
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