Real estate and inheritance
Everyone has heard it or experienced it themselves: a person dies. There is real estate in the estate. The heirs quarrel. The real estate "suffers". Assets are destroyed. Thousands of properties are inherited every day in Germany. Practice shows that many testators have given little or no sufficient thought to what should happen to their real estate.
In a three-part series, we want to report from practice and explain how to avoid disputes about the allocation or realisation of real estate in the case of inheritance. To this end, we give some tips that are easy to implement.
For many, real estate is their largest asset. Unfortunately, however, there is often a lack of legal and tax provision in relation to inheritance. This can take bitter revenge: The heirs do not agree on how to deal with the property. The tax office demands avoidable taxes.
In order to avoid any dispute about the estate among the heirs later, the testator must first think about what he intends to do with his real estate. He can transfer real estate to his heirs during his lifetime, encumbered with a usufruct. He is entitled to the benefits from the real estate (e.g. rents) until his death. The testator can specify in his will exactly what is to happen to this or that property: he can assign it to individual heirs. This has the advantage that the heirs do not have to speculate about the testator's will. He can make other, very individual arrangements.
The next step is the conceptual design of the documents (transfer contract, will, inheritance contract, marriage contract, etc.). And already here many mistakes are made. Because not only inheritance law rules have to be observed, but also family law, maintenance law and tax law. Time and again, heirs experience unpleasant surprises, for example, because they are charged inheritance tax by the tax office. The fact that these taxes could have been avoided if the necessary documents and contracts had been drafted wisely is all the more painful. Yet the work to be done is not that difficult. Although every case is different and should be considered separately, there are many checklists, samples and widespread case studies that can be very helpful in designing your own concept. One only has to make the effort to devote sufficient attention, leisure and decisiveness here.
In the second and third parts of our series, we will explain how to best implement the concept we have found (2) and what to do if things do not work out as planned (3).
Düsseldorf, 14 April 2021
Author: Dr. Dieter Jasper