Inheritance - and investment

Mon, June 27, 2022 12:57 PM By Logan

Around 400 billion Euros are inherited by the next generation in Germany every year. On average, around 350,000 Euros change hands with each inheritance. But how do you inherit correctly?

there is still time to take advantage of the changes in 2021
This Article in Brief

  • How much will you leave behind?
  • Who has a right to your estate once you die - even if you don't want it!
  • How to prepare yourself and leave the legacy you want for your loved ones

From generation to generation

No amount of money can alleviate the grief of losing someone close to you. An inheritance is therefore often associated with mixed feelings. In many families, conflicts also arise when the family succession is not clearly regulated.

Tax allowances

This is how much inheritance is tax free in Germany

In the event of inheritance, the state demands inheritance tax - but only for large amounts. The tax authorities grant the family generous tax-free allowances. The following applies: The closer the degree of relationship, the higher the threshold above which the inheritance must be taxed.

Get advice on how to invest new assets wisely
The laws of hereditary succession regulate who is entitled to inherit and to what extent. Heirs are grouped into different orders in descending order.

  • 1st order heirs: children and their descendants
  • 2nd order heirs: parents and siblings
  • 3rd order heirs: grandparents, aunts, uncles

Only heirs of one order are entitled to inherit. If the deceased had children, they inherit. If the direct descendants died before him, their children inherit, i.e. the grandchildren of the deceased. In this case, heirs of the 2nd and 3rd order do not inherit.

If the spouses lived without a marriage contract and therefore automatically in the joint marital property regime, the surviving spouse inherits ...

  • half if there are children or grandchildren as 1st order heirs from the marriage, or
  • three quarters if the marriage was childless and there are only 2nd order heirs.

The state inherits their cut

Anyone who accepts an inheritance must pay taxes on the inherited assets. The amount of the tax liability depends on the degree of kinship and the size of the inheritance. Closer relatives pay a lower percentage. They are also subject to tax-free allowances, which must be deducted from the sums in the table.

 Inheritance in € Class 1 Tax rate in percent Class 2 Tax rate in percentClass 3 Tax rate in percent 
 75K 7 1530 
 300K 11 2030 
600K  15 2530 
 6Million 19 3030 
 13Million 23 3550 
 26Million 27 4050
more30 43 50 

How to write a Will and Testament

Anyone who is not satisfied with the statutory regulations and wishes to distribute his or her inheritance differently from the way the legislator envisages must draw up a will. However, there are a number of points that need to be taken into account in order for it to be valid.

  1. A will is a will is a will
    Therefore, it should also be titled as such. Although this is not formally required, it underlines the seriousness of the author.
  2. By your own hand
    Write the text yourself and completely by hand. A PC or typewritten document is not accepted, even if it is signed. If you have illegible handwriting, you can attach a typewritten draft as a reading aid so the heirs of your estate can decipher your chicken scratch.
  3. Do not forget your signature!
    Sign your first and last name at the end. This is the only way you can be identified as the author.
  4. Where and when
    The paper must always contain information about the place and date. Because a younger will replaces an older one.
  5. The prodigal ...child retuns
    They cannot be disinherited even by means of a testamentary decree. If they have been excluded from the legal succession, they are is still entitled to the compulsory portion amounting to half of the legal share.

Correctly investing the inheritance

Depot of securities

This is a Heading

Ensure that your assets grow completely in accordance with your wishes. Invest where there are attractive market opportunities and use this Depot to determine whether you would rather invest with an eye to security, balance, or returns.

Investment funds

Investment funds

It's all in the mix. Invest in equity, bond and open-ended real estate funds. Benefit from our strong partners DWS and Allianz Global Investors. Plan your individual investment strategy with us.

Property investment

Property investment

Real estate prices in major cities are on the rise. And the appeal of metropolitan areas is not going to wane any time soon. Investing in real estate - whether for owner-occupation or as a financial investment - could soon prove profitable. And if the inheritance is not sufficient for this? We can advise you on supplementary real estate financing.

Hedging and protection

Hedging and protection

The inheritance includes tangible assets such as real estate? Secure your assets and everything that goes with them. We will be happy to explain the advantages of the VSP asset protection policy from our partner

What to do now
  • Talk with your spouse about what you want to happen
  • Have all your important files and folders in one place
  • Inform yourself about the rights andobligations of each family member
Take a moment to plan your financial strategy by booking a consultation with us today!

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