Around €400 billion are inherited in Germany every year, often unplanned. How statutory succession works, which allowances apply, how gifts every ten years save tax and why a will is not only for the rich.
In short
- Allowances: spouse €500,000, children €400,000 per parent, grandchildren €200,000, siblings and nieces €20,000.
- Statutory succession: the spouse inherits half alongside children, three quarters without; communities of heirs are dispute source number one.
- Gifts during life: allowances renew every ten years, the owner-occupied family home to the spouse tax-free.
- A handwritten will with date and signature suffices; a power of attorney and living will belong with it.
Statutory succession
Without a will the family inherits in orders: first children and grandchildren, then parents and siblings, then grandparents. The spouse inherits alongside: next to children a quarter plus a further quarter from the equalisation of gains, so half; without children next to the deceased’s parents three quarters. Unmarried partners inherit nothing. With several heirs a community of heirs arises in which nobody can act alone; the house can only be sold when all agree, and that is exactly where families break.
The allowances
Inheritance and gift tax only apply above the allowances: spouse €500,000, each child €400,000 per parent, grandchildren €200,000, great-grandchildren and parents €100,000, siblings, nieces, nephews, partners and everyone else €20,000. Above that tax class I applies with 7 to 30 percent for spouses, children and grandchildren, class II with 15 to 43 percent for siblings and nieces, class III with 30 to 50 percent for everyone else. Household effects up to €41,000 and pension allowances for spouses and children come on top.
Giving during life
The allowances renew every ten years. Whoever gives their child €400,000 at 60 and again at 70 has transferred €800,000 tax-free, plus €400,000 on death. A married couple doubles that. The owner-occupied family home passes tax-free to the spouse during life, on death also to children up to 200 square metres if they live in it for ten years. A usufruct allows giving the house away and continuing to live in it; the usufruct value lowers the gift value considerably. Careful: compulsory portion top-up claims run for ten years from the gift, and social welfare can reclaim gifts for ten years.
The will
A handwritten will, written entirely by hand, with place, date and signature, is valid. It sets out who gets what, can contain legacies to non-heirs, appoint an executor and defuse communities of heirs through a partition order. The Berlin will of spouses appoints each other as sole heirs and the children as final heirs; for tax it wastes the children’s allowances on the first death, which legacies to the children can correct. Compulsory portion: children, spouse and parents are entitled to half the statutory share in money even if disinherited. Depositing at the local court costs €75 and ensures it is found.
Power of attorney and living will
A lasting power of attorney authorises a person to handle banking, contracts and authorities in case of illness or dementia; without it the court appoints a guardian, even for spouses. A bank power of attorney beyond death allows paying running costs before the certificate of inheritance arrives. A living will governs medical decisions. All three cost nothing and belong with every will.
The estate in practice
Banks freeze accounts until the certificate of inheritance or a notarial will; applying takes weeks. The tax office must be informed within three months. Estate debts, funeral and certificate are deductible. Whoever inherits debts disclaims within six weeks. And: a conversation during life prevents more disputes than any document.
Try it yourself
Income Tax CalculatorEnter taxable income, read off tax, marginal rate and average rate, with joint assessment.Frequently asked questions
Do I have to report an inheritance?
Yes, within three months to the tax office, even if it is below the allowance. Banks and notaries report anyway.
What does a certificate of inheritance cost?
By estate value, at €300,000 around €1,400 including the affidavit. A notarial will often replaces it.
Can I disinherit a child?
Yes, but it keeps the compulsory portion of half the statutory share. Withdrawal of the compulsory portion is only possible for serious misconduct.
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