Inheritance law is a complex area of law that affects numerous people. In Germany, it is regulated by the Civil Code (BGB). A central question is what claims the state can assert in the context of an inheritance.
The legal order of inheritance
The statutory rules of inheritance apply if there is no will or inheritance contract. The German Civil Code (BGB) divides heirs into different orders:
• First-order heirs : Children and grandchildren of the deceased
• Second-order heirs : parents and their descendants (e.g., siblings, nieces and nephews)
• Third-order heirs : Grandparents and their descendants (e.g., uncles, aunts, and cousins)
• Fourth-order heirs : great-grandparents and their descendants.
“ Within the respective order of succession, the closest relatives inherit first. If there are no heirs or if everyone rejects the inheritance, the state steps in as the legal heir, ” explains lawyer István Cocron.
The inheritance tax
Inheritance tax is levied on the value of an estate and is regulated by the Inheritance and Gift Tax Act (ErbStG). The amount of tax depends on the degree of kinship and the value of the estate. There are various tax brackets and allowances:
• tax Class I : Spouse, Registered Civil Partner, Children, Grandchildren, Parents and Grandparents
• tax Class Ii : Siblings, Nieces, Nephews, parents-in-law, children-in-law, Divorced Spouses
• Tax class III : All other persons
The tax-free allowances include:
• Spouses and life partners : €500,000
• Children and stepchildren : €400,000
• Grandchildren : €200,000
• Parents and grandparents upon acquisition by inheritance : €100,000
• Other persons in tax classes II and III : €20,000
Inheritance tax is levied on the amount exceeding the tax-free allowances, with tax rates between 7% and 50% depending on the tax bracket and the size of the estate.
Compulsory share: Minimum entitlement of close relatives
The compulsory portion is a legally guaranteed share of the estate for certain relatives. It amounts to half of the statutory share of the inheritance and can be claimed by the following persons:
• Descendants such as children and grandchildren
• Spouses and registered civil partners
• Parents of the deceased, if no descendants exist.
This claim usually takes the form of a monetary claim and must be asserted within three years of the inheritance.
Disclaimer of inheritance
An heir can refuse an inheritance, for example, if the estate is over-indebted. This must be done within six weeks of learning of the death. If the inheritance is refused, the next person in the legal order of succession becomes the heir. If everyone refuses, the estate passes to the state, which can also refuse it if it is over-indebted.
Escheat and your rights
This article provides a foundation for understanding your rights and obligations when transferring assets. Fiscal inheritance law lies at the intersection of tax and inheritance law, addressing both the legal aspects of estate planning and taxation.
• Taxation : The amount of inheritance tax depends on the degree of kinship, the value of the assets, and the type of estate.
• Will : It allows for clear instructions regarding the distribution of assets and also has tax implications.
International Aspects and Special Cases
If the deceased owned assets in different countries or if the heirs reside abroad, double taxation agreements and international inheritance law may apply. If the estate is over-indebted, the tax authorities may reject the inheritance, and the creditors will be satisfied from the estate.
Avoiding escheat
A will or inheritance contract helps to regulate one’s estate in a targeted manner and avoid inheritances subject to state control. Alternatively, gifts can be made during one’s lifetime, whereby tax-free allowances can be used to reduce the tax burden.
Advice and legal support
For complex questions concerning inheritance law or international estates, professional advice from specialized lawyers or notaries is strongly recommended.
