Draw up a will to protect your surviving dependants? Or transfer your assets to the next generation during your lifetime? (gift). Accept an inheritance, contest it or is it better to disclaim it? And how can claims for a compulsory portion be asserted? Inheritance law issues can affect you as the transferor, heir, legatee or as a person entitled to a compulsory portion and often raise questions as to how best to proceed in each individual case.
Inheritance law is rightly considered one of the most difficult areas of law. This is because it requires a great experience and foresight, as arrangements such as a will in particular only have an effect in the future and circumstances may have changed again by then. In addition, the advisor must also consider and master other areas of law, such as company law when transferring companies and company shares (company succession). Or, in particular, tax law. This is because the tax burden (in particular inheritance tax, gift tax and income tax) can be significantly influenced or reduced through clever structuring. The most important thing here is to make strategic use of personal tax allowances and other tax benefits in order to save taxes
We are specialised in in inheritance law, tax law and company law in Landshut, Munich and throughout Germany. This one-stop advice is our great strength
“There is probably no other area of life that can trigger such different emotions and raise such different questions as an inheritance or the succession of assets during one’s lifetime. We advise and represent private individuals and entrepreneurs comprehensively in inheritance law and asset and company succession and relieve our clients wherever we can.” Dr M. Lingenberg
OUR SERVICES IN INHERITANCE LAW
- Drafting and reviewing of wills and inheritance contracts
- Drafting and reviewing joint wills or spouses’ wills (e.g. Berlin will)
- Drafting and reviewing special types of wills such as business wills, divorce wills and wills for the disabled
- Interpretation and contestation of existing wills, inheritance contracts and joint wills
- Conceptualisation of company successions, i.e. comprehensive advice on the transfer of companies and company shares, with the best possible avoidance of tax burdens
- Asset succession in the private sphere (anticipated succession), i.e. tax-optimised succession planning for lifetime gifts and asset transfers through succession
- Advice on the question of whether an inheritance should be accepted or waived (acceptance or waiver of an inheritance)
- Advice on the possibilities of limiting the liability of the heir (liability of heirs, limitation of liability)
- Support and representation in the settlement of communities of heirs
- Support in the assertion and defence of compulsory portion claims
- Assistance with the enforcement of legacy claims
- Assistance with the enforcement of other inheritance law claims
- Representation in court in certificate of inheritance proceedings and all inheritance proceedings
- Advice on the execution of wills; assumption of the office of executor of a will
- Drafting health care proxies (general power of attorney), living wills and care directives
Do you have an inheritance law matter that you would like to discuss with us? Please feel free to contact us. Our lawyers and tax consultants in Landshut and Munich who are specialised in inheritance law and tax law will be happy to advise you!
INHERITANCE, INHERITANCE, RENUNCIATION, LIMITATION OF LIABILITY
Upon inheritance, the heir automatically assumes the legal position of the deceased. All assets and debts are transferred to the heir, for which they are liable with their private assets. This raises the question of whether the inheritance should be disclaimed (renunciation) or whether there are ways of limiting the heir’s liability . When making this decision, it is important to obtain an overview of the estate as quickly as possible, in particular whether the estate is over-indebted. This is because the decision to waive the inheritance must generally be made within 6 weeks of becoming aware of the inheritance.
What do you have to do if you want to accept the inheritance? Do you have to apply for a certificate of inheritance, pay out compulsory portions or fulfil legacies? Or submit an inheritance tax return? Our lawyers and tax consultants in Landshut and Munich, who are specialised in inheritance and tax law, will discuss the next steps with you.
COMMUNITY OF HEIRS, SETTLEMENT
If several people inherit, a community of heirs is created, i.e. the estate becomes the joint property of the heirs. All heirs must now jointly settle the estate, i.e. fulfil legacies, possible compulsory portion claims and other liabilities. The community of heirs must then be divided up and the remaining assets distributed among the heirs. This joint procedure between the heirs is prone to disputes and often proves difficult as the heirs do not agree with each other and, in the worst case, no longer speak to each other at all. The heirs often live far away from each other, which makes it even more difficult to act together.
Our lawyers and tax advisors that are specialised in inheritance law and tax law can help you to avoid disputes between communities of heirs. At the same time, we ensure, that the settlement of the community of heirs is favourable for you from a tax point of view and therefore incurs as little inheritance tax as possible. We also support you in valuation issues. This is because the valuation of assets in the estate, in particular the valuation of real estate, is a frequent point of contention in the settlement of communities of heirs.
WILL, CONTRACT OF INHERITANCE, JOINT WILL
Why should you make a will? If you decide not to make a will, you leave your assets to your closest living relatives in accordance with the legal order of succession. In individual cases, this can lead to fierce disputes and serious problems within the community of heirs, as the surviving dependants do not always agree on the distribution of the deceased’s assets. In addition, it may be that the testator does not want this succession at all and would like to see other people as heirs.
A will regulates who should inherit and overrides the legal order of succession. Your will is decisive. In an initial consultation, we will determine your ideas and wishes together. We can then develop the best strategy for you to realise your ideas. This includes choosing the right form of will. Should an individual will, a joint will or an inheritance contract be drawn up? Each type of will has its own special features.
An individual will can be drawn up by anyone, either handwritten (in your own hand) or before a notary. It can be changed at any time.
A joint will can only be drawn up by spouses, again in handwriting or before a notary. However, unlike an individual will, a joint will can no longer be changed without restriction if one spouse dies. The classic case of a joint will is the so-called “Berlin will”. This provides for the surviving spouse to inherit everything and for all of the spouses’ assets to pass to the children upon their death. This is often the desired construction, particularly for reasons of protection for the spouse. However, it has inheritance tax disadvantages. However, there are sensible modifications to the Berlin will that balance the conflict between financial security for the surviving spouse and a tax-saving structure. Our lawyers and tax consultants in Landshut and Munich, who are specialised in inheritance and tax law, will be happy to show you the existing options and variants.
As the name suggests, an inheritance contract is a contract. This means that it is binding in its provisions from the outset and cannot be changed unilaterally. The contract of inheritance can only be drawn up and amended before a notary. Each type of will primarily determines who is to be the heir, i.e. who automatically receives all of the testator’s assets and liabilities by law. The type of heir must be decided. A full heir, a prior heir or a subsequent heir. A prior heir is generally limited in his or her authority to dispose of the estate. This is intended to preserve the estate for the subsequent heir who succeeds the prior heir upon the latter’s death.
In addition to designating heirs, it is also possible to bequeath to other persons. Through such a legacy, the testator can bequeath any type of asset to third parties, in particular sums of money. A legacy gives the beneficiary (legatee) a claim against the heir or heirs for the transfer of the assets in question.
The drafting of wills in inheritance law is therefore customised work. The exact wording of a will is very important. If exactly the right terms are not used, the desired result will not be achieved. And a holistic approach is always essential to ensure that the transfer makes sense for you from a legal, tax and business perspective and, in particular, to avoid unnecessary inheritance tax payments.
Our lawyers and tax consultants in Landshut and Munich, who are specialised in inheritance law and tax law, will support you in all matters relating to the drafting of your will.
DIVORCE WILL, WILL FOR THE DISABLED, COMPANY WILL
Special life situations require special wills. If you are divorced, a will is often essential, as this is the only way to prevent your ex-partner from gaining access to your assets via your children (divorce will). And if you have a disabled child, you may want them to be looked after, but you want to protect the family assets from being accessed by the social authorities. To this end, it is advisable to arrange for a prior and subsequent inheritance, coupled with the execution of a will (disabled person’s will).
CORPORATE SUCCESSION
Company succession, i.e. the transfer of a company or the transfer of company shares to a successor, either by transfer during one’s lifetime or by succession, is a complex legal area, as many specialist areas intertwine here too. In addition to inheritance law, tax law and company law must also be taken into account.
Tax law in particular plays a very important role in the organisation of company succession. This is because there are extensive tax benefits for the transfer of business assets, which mean that the transfer results in little or no gift tax or inheritance tax. In each individual case, it is therefore important to check carefully whether the conditions for these benefits apply. And whether clever arrangements in the run-up to a transfer can still fulfil these requirements. Company law plays an important role here, as the requirements for the benefits depend, for example, on the legal form in which the company is managed (e.g. GmbH, GmbH & Co. KG or sole proprietorship). It may therefore be necessary to consider changing the legal form before a transfer.
However, comprehensive consideration of tax law in a business succession can not only save inheritance tax or gift tax, it can also avoid income tax. This is because incorrectly organised company succession, especially in the case of incorrectly drafted wills, can result in the release of so-called hidden reserves, which are taxable. In the case of valuable companies, this can lead to disastrous financial results.
Company succession must therefore be approached with caution and, in addition to inheritance law, tax law and company law must also be considered.
Our lawyers and tax consultants in Landshut and Munich, who are specialised in inheritance law, tax law and company law, will discuss the details and options with you.
GIFTS, ASSET SUCCESSION, ANTICIPATED INHERITANCE
Anticipated succession or asset succession involves making gifts during one’s lifetime to persons who are expected to inherit later. The motivation for such gifts may be to utilise the personal tax allowances, which are renewed every 10 years.
With an early start of the transfers, the allowances can therefore be utilised several times. This saves gift tax and inheritance tax. The most important personal allow ances are
- to spouses Euro 500,000.00
- to children Euro 400,000.00
- to grandchildren Euro 200,000.00
- to parents (inheritance) Euro 100,000.00
- to parents (gift) Euro 20,000.00
- to siblings Euro 20,000.00
- to strangers Euro 20,000.00
The same allowances apply to gifts and transfers on inheritance. And all transfers, regardless of whether they are gifts during your lifetime or transfers in the event of inheritance, that take place within 10 years are added together and the tax-free amount only applies once.
Tax law therefore plays a particularly important role in the organisation of anticipated succession and asset succession and makes it necessary to regulate your financial circumstances early and with foresight.
As advantageous as the early transfer and thus the tax savings through (repeated) utilisation of personal allowances are, it is also important to ensure that the transferor remains financially secure for old age despite the transfers (protection of the donor). There are a number of options here which we would be happy to discuss with you. In particular, reversion clauses can be included in gift agreements, which provide for a reversion of the object of the gift in the event of financial difficulties on the part of the donor. Or houses or flats can be transferred as a gift and the donor retains a lifelong usufruct or right of residence. In this way, the asset is transferred, but the donor may continue to use the property for life. And in the case of usufruct, he can also rent it out and collect the rents.
Another important condition for a gift often is, that, although assets are to be transferred to the next generation, the assets should nevertheless remain in the family in the long term. This may be desirable, for example, in the case of property that has been in the family for generations. This can be achieved by means of company law, for example, by all purchasers (usually the children) forming a partnership (keyword: family company) and the transferor transfers the object of the gift to the company. The partnership agreement can then bind the partners (children) to each other and, for example, stipulate that no partner can sell his share without the consent of all the others or the transferor.
The situation is similar with company succession. Here too, it can make strategic and tax sense to transfer parts of the company at an early stage. And here too, the transferor can reserve the right to usufruct, e.g. of company shares, and thus secure income for the future.
Your will is decisive. Regardless of all possible (tax) optimisations in the structuring, your wishes and ideas are our priority when it comes to asset succession. We will determine these together in an initial discussion. We can then develop the best strategy for you. With our team of lawyers and tax advisors in Landshut and Munich, who are specialised in inheritance law and tax law, we always take a holistic approach to ensure that the transfer makes sense from a legal, tax and business perspective.
DEFENCE/ENFORCEMENT OF COMPULSORY PORTION CLAIMS
The law on compulsory portions is complex. Those entitled to a compulsory portion can assert claims for information, valuation and payment against the heir. Our specialists in inheritance law in Landshut and Munich support you as an heir in the correct handling of compulsory portion claims and in the defence against unjustified claims.
If you are disinherited as a child by a parent appointing someone else as heir, you are entitled to a claim to a compulsory portion. This corresponds to half of the statutory inheritance share. You therefore have a monetary claim against the heir in the amount of a certain percentage of the deceased’s total assets. We help you as the beneficiary of the compulsory portion to determine the amount of your claim, in the enforcement of information and valuation claims and thus in the enforcement of your claim to a compulsory portion. Valuation issues are often involved. Here, too, we can help you through our contacts with competent experts.
Precisely because it is often a matter of valuing the estate (which can be a matter of great dispute), a settlement of the compulsory portion claim should always be considered. It can also help to prevent the family peace from being completely destroyed.
Our specialists in Landshut and Munich, who are experienced in inheritance law and tax law, are also very adept at negotiating, but always have your best interests in mind.
TAX, INHERITANCE TAX, GIFT TAX
Considerations relating to gift tax and inheritance tax, but also to other types of tax such as income tax, play a particularly important role in the drafting of wills and in the case of lifetime gifts (keyword: realisation of hidden reserves) play a major role. There are far-reaching structuring options here, but also many “pitfalls” that can be very expensive. Our great strength is our interdisciplinary advice in inheritance law and tax law. We therefore always keep an eye on the tax side of all inheritance law arrangements or lifetime gifts in order to achieve the best possible or “most favourable” result for you.
INHERITANCE TAX AND GIFT TAX RETURNS
We also prepare your inheritance tax return or gift tax return for you as an heir, legatee or donee. And we will argue on your behalf before the fiscal courts (FG) or the Federal Fiscal Court (BFH) if the tax office disagrees with us. At the same time, our lawyers and tax consultants in Landshut and Munich, who are specialised in inheritance law and tax law, also prepare all other tax returns that may be required in connection with an inheritance and subsequently, such as income tax returns, etc.
REPRESENTATION IN COURT AND BEFORE THE TAX OFFICE
In inheritance law, it is often in the interests of both parties and family peace to find a settlement out of court. However, this is often not possible, and the parties are irreconcilable. In these cases, we also represent you in court and, in the case of tax disputes, before the tax office or the tax court. Legal disputes usually involve the following:
- Representation in certificate of inheritance proceedings before the probate court
- Enforcement or defence of compulsory portion claims
- Settlement of communities of heirs
- Enforcement or defence of legacy claims
- Representation in the contestation and interpretation of wills, inheritance contracts and joint wills
- Representation before tax courts in tax matters
EXECUTOR OF THE WILL, EXECUTION OF THE WILL
Sometimes it makes sense to provide for the execution of a will when drafting a will. For example, in the event that the heir is still a minor at the time of inheritance. The executor then manages the estate until the heir comes of age. There are many constellations in which the appointment of an executor makes sense. Our specialists in Landshut and Munich, who are experienced in inheritance law, will advise you on the possibilities and the advantages and disadvantages of executorship when drafting your will.
We offer our clients the opportunity to act as executor of the will themselves if the worst comes to the worst. Our entire experience in inheritance law, tax law, company law and business management matters is then available to you or your heirs. You benefit from our holistic approach as a network of lawyers, tax advisors and auditors.
HEALTH CARE PROXY, LIVING WILL
A health care proxy is a power of attorney in the event that you are permanently or temporarily unable to make decisions for yourself. It is usually very broadly worded and authorises the authorised representative to make extensive decisions on your behalf in personal, financial and economic matters. It is therefore very important that you place your full trust in the authorised representative.
There are many templates available on the Internet for formulating a power of attorney. This costs nothing. However, in view of the far-reaching powers and consequences of such a power of attorney, we always recommend an initial, albeit brief, consultation with our lawyers in Landshut or Munich, who are experienced in inheritance law. The resulting costs are always well invested in view of the potential damage.
A living will contains instructions to the doctors as to how you wish to be treated or not treated. The living will is therefore also an enormously important document, as it is about your life. We therefore recommend that you do not simply sign a sample from the Internet, but that you obtain information and advice on the content from our specialists in Landshut and Munich who are experienced in inheritance law.