Private or Public Administration – Which Should You Choose?
When a person passes away, the question of how to settle their estate arises. The district court notifies the heirs of their option to choose between private or public administration. The choice of type of administration depends on several factors, such as the financial situation of the estate, the ability of the heirs to cooperate, and the complexity of the estate.
In this article, we take a closer look at the difference between private and public administration, and what you should consider before choosing.
What is Private Administration?
In private administration, one or more of the heirs takes over responsibility for the entire estate settlement. This means that the heirs themselves are responsible for covering the deceased’s debts, and distributing the assets. Private administration can be a flexible, and cost-effective solution, but it also requires the heirs to have a good overview of the estate’s assets and liabilities, and the ability to cooperate.
- Cost-effective: You avoid the costs of an estate administrator.
- Full control: The heirs manage the process themselves.
- Faster completion: Private administration can often be completed more quickly than public administration.
- Personal liability: The heirs assume responsibility for the deceased’s debts.
- Requires expertise: Legal and financial knowledge is necessary to handle the estate’s tax obligations, and other legal aspects.
- Risk of conflict: Disagreements between the heirs may arise, especially in complicated estates.
What is Public Administration?
In public administration, the district court appoints an administrator, often an attorney, who takes responsibility for the entire estate administration. This is a safe solution for heirs who want a neutral third party to handle the inheritance settlement, especially when there is disagreement between the heirs, or the estate is complicated.
- Neutral third party: The estate administrator ensures that the inheritance is distributed correctly, and, in the event of a dispute, can mediate between the heirs.
- No personal risk: The heirs are not liable for the deceased’s debts.
- Legal expertise: The entire process is handled by an experienced executor, who ensures that the estate is handled in accordance with applicable law.
- Expensive: The executor’s expenses are covered by the deceased’s estate.
- Less flexibility: The heirs have less control over the process.
- Time-consuming: Public administration can take longer than private administration.
How to Choose the Right Form of Administration?
The choice between private and public administration should be based on a thorough assessment of the estate’s financial situation, the heirs’ ability to cooperate, and the complexity of the estate. We recommend that you start by obtaining a complete overview of the deceased’s assets and liabilities. As an heir, you can request a power of attorney from the district court, which gives you access to information about the deceased’s assets and liabilities from the Norwegian Tax Administration (NO: Skatteetaten), and banks.
Public administration is often recommended if the estate is insolvent (the debts exceed the value of the estate), or if there is significant disagreement between the heirs. If the estate is solvent (the value of the estate exceeds the debts), and there is agreement between the heirs, private administration is often a favourable solution. Even in more complicated estate settlements, it may be both faster and more cost-effective to take over the estate in a private administration with the assistance of an attorney, rather than applying for public administration.
Contact Us for Assistance
Brækhus law firm has extensive experience with both private and public estate administration, and we can assist you with everything from advice to the implementation of the estate administration process.
Whether you are considering private or public estate administration, we can offer advice and assistance tailored to your situation. Contact us today for a consultation about your case.
Read more: Brækhus’ expertise within Family Law and Inheritance
