Inheritance law is one of the most difficult fields of law, not only in terms of law complexity but also in terms of emotion. The mourning is often followed by bitter disputes over the inheritance that can rip apart the entire family.
Inheritance law in Germany follows the principle of blood relatives. If the deceased does not leave behind a Will, the estate of the deceased will be inherited by his relatives depending on the different ranking assigned to them by law. The first ranking covers the descendants of the deceased. They are foremost the children of the deceased, who inherit in equal shares and exclude the more distant descendants (grandchildren, great grandchildren) The surviving spouse of the deceased is also a statutory heir.
The testator is not prevented from distributing his estate in a way completely different from that prescribed by law. He/she can, for example, leave everything to only one of his/her children or stipulate that the entire estate should go to the surviving spouse and even freely stipulate the inheritance share of his/her statutory heirs. A dispute often results in such cases because the statutory heirs who should become less than the others or even be excluded from the succession do not want to accept that without a fight.
The inheritance law actually gives children of the deceased who are to be excluded from the succession through the Will a so-called mandatory share right. The same applies to the surviving spouse if the testator excludes him/her from the succession. Such a mandatory share is only one half of that what the mandatory share successor would have got as statutory successor – the prospect of that can be enough incentive to fight, if necessary before the court.
To prevent such conflict, it is sensible to deal with the matter at an early stage. A careful successor planning is especially important if the estate includes a business or company or shares in such because a conflict later can endanger the future success of the business. Such planning is even more important in the case of large assets because measures can then be taken to reduce or completely avoid potential inheritance or gift tax resulting from the asset transfer, for example, by transferring parts of the assets to the successor as a gift prior to death.
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Graduate in Tax Affairs,
Consultant for International Tax Law
Former tax inspector of the german tax authority