Inheritance & Gift Taxes
Tax-optimized estate planning and tax returns
Inheritance tax and gift tax represent a burden for the succession. The more intensive the access of the tax authorities is, the greater is the danger that, for example, transferred real estate must be sold or that the business successor cannot continue the business. Especially after the latest reforms of the inheritance tax and gift tax, lawyers and tax consultants have instruments at their disposal to help avoid the accrual of taxes.
Inheritance tax can be structured not only in advance of the inheritance, for example through lifetime gifts or tax-optimized wills. There are also "correction possibilities" after the inheritance, for example by disclaiming the inheritance or asserting claims to a compulsory portion for tax reasons. Incidentally, special rules must be observed for communities of heirs when filing an inheritance tax return.
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Legal services related to inheritance tax and gift tax
Our specialist lawyers for tax law, inheritance law, family law and corporate law advise you nationwide on all questions relating to inheritance tax and gift tax:
- Arrangements to optimize inheritance tax and gift tax, especially in the context of anticipated succession by means of gifts.
- Structuring of tax-optimized wills and inheritance contracts
- Filing of inheritance tax returns and gift tax returns
- Valuation of real estate and companies for inheritance tax and gift tax
- Appeals against inheritance and gift tax assessments as well as lawsuits before the fiscal courts
- Tax-optimized business succession
- Advice on the utilization of tax allowances for inheritance tax
Overview of the law of inheritance tax and gift tax
Below you will find frequently asked questions and answers regarding inheritance and gift tax from our consulting practice.
What allowances and tax rates are there?
Gifts and inheritances within the scope of personal allowances remain tax-free. For children they amount to 400,000 euros (from each parent), for spouses even 500,000 euros. Siblings, nephews, nieces and unrelated persons such as life partners and friends, on the other hand, only have a tax-free amount of 20,000 euros. The tax rates also depend on the family relationship. Close relatives such as spouses and children pay between 7 and 30 percent to the tax authorities, depending on the amount of the gift or inheritance; for unrelated persons this is already 30 to 50 percent.
|Nephew, Niece||20.000 EUR|
|Anyone else||20.000 EUR|
What are the exceptions and benefits?
The most important privilege is for heirs of business assets. The new inheritance tax law also continues to offer entrepreneurs considerable relief and often extensive tax exemption - provided that the business is continued and jobs are preserved.
In addition, there are numerous other tax exemptions and allowances such as for household effects, owner-occupied real estate, occasional gifts or donations to charitable institutions.
What rules apply to real estate?
Plots of land, houses, apartments - real estate is economically regularly one of the most important estate values. There are numerous special features for them, both in terms of possible inheritance tax and gift tax benefits and in terms of valuation.
You can find further information on Real Estate Taxes here: Real Estate tax
What about business assets?
Inheritance tax and gift tax for companies or shares in companies have their own rules. The exemptions and concessions for business assets are just as complex and varied as the methods of business valuation for determining the tax. For housing companies there are special conditions for exemption from inheritance tax or gift tax.
In which cases is there any need for action?
There is a need for action in the matter of inheritance tax or gift tax mainly in the following constellations:
- Real estate: In the case of real estate, the valuation and use of the property plays a significant role. Between spouses, a house or apartment that they live in themselves can be transferred tax-free.
- Business assets: Special regulations apply to the transfer of businesses or an investment. Here it is important to make the best possible use of the statutory exemption rules. You can find information on company valuation for inheritance and gift tax here: Enterprise value inheritance and gift tax
- Separation of property: Spouses in the matrimonial property regime of separation of property give away the tax-free equalization of gains in case of inheritance. A change to a (modified) community of gains is a good option.
- Berlin Testament: In a joint will with the appointment of the children only as final heirs, the tax-free allowances for children cannot be used optimally.
- Foreign assets: In the case of real estate or an account abroad, it must be checked whether the foreign tax office wants to access the assets in addition to the German one and how double taxation can be avoided.
- Distant heirs: Brother, sister, niece and nephew do not belong to the privileged tax class I, just like the life partner, and are particularly liable to inheritance tax with a low allowance and high tax rate. In addition to marriage and adoption, there are also possibilities for tax structuring.