Inheritance law & gifts

Inheritance

The German Basic Law guarantees the freedom to make a will: through a will or contract of inheritance, anyone can decide for themselves who receives their assets in the event of their death. The testator does not have to adhere to the legal order of succession. For example, they can appoint unrelated persons as heirs, change the statutory inheritance shares and order bequests or the execution of wills. These arrangements can be made in a will or contract of inheritance.

All deeds relevant to succession will be recorded in the registers of wills at the registry offices until the end of 2011 and from 2012 in the Central Register of Wills of the Federal Chamber of Notaries (ZTR) is registered. In the event of death, this ensures that the deed is taken into account in the probate proceedings. This ensures under procedural law that the last will documented in a notarial deed is put into practice.

FORMS OF TESTAMENTARY DISPOSITIONS

Testament. The will can be drawn up as an individual will or - by spouses or registered partners - as a joint will. Although a will can also be drawn up by hand - as a completely handwritten will - notarial advice and preparation and its notarization are strongly recommended: Handwritten wills often contain ambiguities or errors that later give rise to disputes. Other precautionary instruments such as powers of attorney, compulsory portions and many other aspects must also be taken into account when drafting a disposition of property upon death. These few examples illustrate the legal complexity of the subject.

Inheritance contract. An inheritance contract is a disposition of property upon death in the form of a contract involving at least two contracting parties. It must be notarized. Unlike a joint will, persons who are not married to each other can also conclude an inheritance contract. The contract of inheritance is less expensive than a notarized joint will, as it does not have to be placed in the special official custody of the probate court.

The dispositions upon death made in an inheritance contract can generally only be changed with the consent of both contracting parties and cannot be changed at all after the death of one of the contracting parties. In many cases, this obligation is a sensible means of controlling the estate in the interests of the first to die. However, an inheritance contract can also provide for a later unilateral change to the dispositions to a large extent, provided that a binding effect is not intended. The contract of inheritance is therefore an extremely flexible and individual instrument with which the succession can be optimally adapted to the wishes of the testator.

DESIGN TOOLS

In addition to the appointment of heirs, there are a large number of other instruments. In our consulting and structuring practice, we notaries combine these in such a way that your last will and testament is given optimal and legally secure validity.

Legacy. If certain persons are not to become heirs but only receive individual items from the estate, for example, you can make a bequest in respect of these items. The bequeathed object does not immediately become the property of the beneficiary upon your death. Instead, the heir must return the item to the beneficiary.

Execution of a will. You can order the execution of a will by disposition upon death. Unless otherwise specified, the executor's tasks include taking possession of the estate, executing your last will and testamentary dispositions and, in the case of a community of heirs, settling the estate among the heirs. The appointment of an executor makes sense for larger estates or if it is to be expected that the heirs would be unable to manage the estate due to minority, inexperience or for medical reasons.

Appointment of a guardian. Parents can appoint a guardian for their child in the event of their death. This is also done by disposition of property upon death.

Gifts and anticipated succession

There is often a need to transfer assets to the next generation while they are still alive. In addition to the area of company succession, the area of Transfer of real property to spouses or children is of great importance. If the transfer is made as a gift with a view to future succession, it is referred to as anticipated succession.

Legally complex transfers of real estate, inheritance and business shares as well as future Gifts require notarizationas well as waivers of inheritance and compulsory portions. We notaries are your expert advisors in this regard. However, the sometimes considerable tax savings opportunities should not obscure the fact that a transfer only makes sense if the transferor and transferee are "ready" for the transfer of assets and trust each other as much as possible.

The respective advantages and disadvantages must be carefully weighed up when deciding whether a gift should be made by transfer during life or by testamentary disposition. The first argument against a transfer during one's lifetime is that the transferor is deprived of the object. Recovery is only possible to a limited extent under the law, but can be agreed in the transfer agreement under certain conditions. On the other hand, transferring during one's lifetime also offers considerable advantages. Examples include the following:

• The transfer of property from parents to children can make it easier for them to set up their own household or business.
• The Supply of the seller can be secured as part of the transfer agreement, e.g. by granting a usufructuary right or a residential right.
• Claims to a compulsory portion of the purchaser and third parties may be restricted under certain conditions.
• Gift or inheritanceTax allowances can be utilized several times by distributing the controllable processes over time.

The motives that ultimately lead to a grant of land are just as varied as the resulting contractual options. For example, depending on the motivation, the contract may provide for distance payments to the transferor, the granting of rights of use, maintenance obligations, etc. There are no limits to the imagination. There are no limits to the imagination here. Of course, the tax implications must also be examined in each individual case.

We will work with you to draw up a contract that meets your needs and discuss the implications in detail.