From generation to generation: offer something or inherit it?

  • Weigh the pros and cons in each individual case – keep an eye on tax aspects, family situation and long-term planning
  • Donation: notarial contract required during lifetime
  • Chain donation: multiple use of allowances possible and potential total evasion of gift tax
  • Succession: will or inheritance contract as legal basis

The question of whether to donate or inherit real estate concerns many people who want to plan their wealth for the long term. The experts at VON POLL IMMOBILIEN offer you valuable advice to make an informed decision. You can find the press release below and in the appendix in PDF format.

If published, we would be happy to receive a link or sample copy.

Sincerely

Franka Schultz

Public relations manager

Tel: +49 (0)69 – 26 91 57 603

Email: Franka.Schulz@von-poll.com

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PRESS RELEASE

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From generation to generation: offer something or inherit it?

  • Weigh the pros and cons in each individual case – keep an eye on tax aspects, family situation and long-term planning
  • Donation: notarial contract required during lifetime
  • Chain donation: multiple use of allowances possible and potential total evasion of gift tax
  • Succession: will or inheritance contract as legal basis

Frankfurt am Main, MAY 28, 2024 – The question of whether to donate or inherit real estate concerns many people who want to plan their wealth for the long term. “It is better to give with a warm hand than with a cold hand…” – this old adage still applies today. In many situations, donating property can have clear benefits. Particularly when assets are transferred during one's lifetime, a donation can not only provide tax advantages and avoid conflicts between potential heirs, but can also, among other things, guarantee a right of residence for life. But inheriting property is also an option for transferring wealth and can be done, for example, through a will or an inheritance contract. However, it is important to always take tax and legal aspects into account. The experts at VON POLL IMMOBILIEN (www.von-poll.com) provide clarity on this subject and offer valuable advice to make an informed decision.

“Real estate is one of the most important assets people own. “It is therefore crucial to understand the different aspects of a donation and an inheritance,” explains Dr. Tim Wistokat, LL.M., lawyer and head of the legal department at VON POLL IMMOBILIEN. He continued: “While both options may offer benefits, there are also legal, financial and emotional considerations that must be taken into account. In the case of a donation, for example, tax aspects such as exemptions and gift tax may play a role, while in the case of inheritance, legal regulations such as property law must be taken into account. inheritances and possible requests for compulsory sharing.

Tax Saving Model Gift: What's Important?

Transferring real estate during your lifetime can be worth it. “This anticipated inheritance can offer financial advantages in order to pass on assets to the next generation,” explains VON POLL IMMOBILIEN lawyer Dr. Tim Wistokat, LL.M. “A life transfer must always be certified by a notary. Securities, cash and real estate can be transferred tax-free under certain conditions. However, gift taxes must be taken into account if the exemption amount is exceeded. The tax debtors are the donor and the buyer, but both can agree on which of them should bear the tax burden internally. If the donor bears the gift tax, the assumption of the tax constitutes an additional donation. In principle, gift taxes are calculated according to the same principle as inheritance taxes,” explains Dr. Tim Wistokat, LL.M., continues. The regulations on this subject are also consolidated into one law, the Inheritance and Gift Tax Act (ErbStG).

There are three classes of inheritance tax and reductions of between 20,000 euros and 500,000 euros depending on the degree of relationship. In addition to spouses and life partners, tax class I only includes direct descendants benefiting from different tax reliefs. The personal allowance is 500,000 euros for spouses and 400,000 euros for children. If the value of the property is greater than the exemption amount, it can also be transferred in stages. The allowance can be exhausted again every ten years. In this way, assets can be transferred over several decades without tax deduction, which also affects the long-term retention of an asset in the family.

A gift may also be subject to conditions for the recipient. If the owner wishes to stay within his four walls as long as possible, a right of residence or usufruct can be registered in the land register. It can also be agreed that the beneficiary will take over the care later or cover a large part of the costs of providing care.

Plan asset succession from the start

Inheritance taxes may also apply to inheritances. “However, only the heir is liable for the tax, but inheriting real estate also has its own advantages. If you need your own home for retirement, it may make sense to keep it, because your four walls are of crucial importance in the event of occupational disability or old age. Additionally, the testator retains control of the assets until his or her death. Inheritance allows property to be kept in the family and used as an asset for generations,” explains Dr. Tim Wistokat, LL.M., legal expert at VON POLL IMMOBILIEN. And further: “But when it comes to inheritance, the question is often who can claim what part of the inheritance. If this is not specified in a will, legal succession applies. If the assets are to remain in the family, a will or inheritance contract can specify who will inherit them in the future. A handwritten private will, which can be drawn up without a notary, is sufficient. If other heirs are excluded, they will not be left empty-handed: after the death of the testator, they will be able to claim their obligatory share, i.e. at least half of the legal share of the inheritance.

Conclusion

If real estate values ​​exceed the tax exemption limit, a lifetime gift is preferable to a traditional inheritance because the exemption amounts can be used multiple times to avoid gift tax. This can help save the financial burden on heirs. Early real estate valuation therefore also influences the type of inheritance settlement. For example, thanks to a donation, parents can obtain a right of residence for life, which allows them to live free of charge in the transferred property.

“On the other hand, bequeathing real estate by will or bequest offers clear and legally binding regulations for the handling of the inheritance,” emphasizes VON POLL IMMOBILIEN legal expert Dr. Tim Wistokat, LL .M. “This allows the testator to distribute the property according to his wishes. However, claims on the obligatory share of other heirs and inheritance taxes can play a role here. Ultimately, the decision to gift or bequeath property depends on a variety of factors, including tax considerations, family circumstances and long-term planning. Individual circumstances and goals play a crucial role in this choice. At VON POLL IMMOBILIEN, we recommend that our clients inform themselves carefully and seek legal advice in order to ultimately make the best possible decision.

Most interesting Blog post on the theme of real estate, lifestyle and modern living as well as a free real estate estimate VON POLL IMMOBILIEN offers you on its website.

About Poll Immobilien GmbH

Von Poll Immobilien GmbH (www.von-poll.com), active throughout Europe, is headquartered in Frankfurt am Main. His work focuses on brokering value-stable properties in prime residential and commercial locations. With more than 400 stores and more than 1,500 employees, VON POLL IMMOBILIEN, which also includes the divisions VON POLL COMMERCIAL, VON POLL REAL ESTATE, VON POLL FINANCE and VON POLL HAUSVERWALTUNG, is present in Germany, Austria, Switzerland, Spain, Portugal , Hungary, Italy, the Netherlands, France and Luxembourg, making it one of the largest brokerage companies in Europe. The Capital Broker Compass has once again awarded VON POLL IMMOBILIEN top marks in its October 2023 issue. The managing partners are Daniel Ritter and Sassan Hilgendorf. The management includes Beata von Poll, Eva Neumann-Catanzaro, Tommas Kaplan, Dirk Dosch and Wolfram Gast.

von Poll Immobilien GmbH 
Feldbergstraße 35, 60323 Frankfurt am Main
Telefon: +49 69 26 91 57-0 | Telefax: +49 69 26 91 57-11
E-Mail:  frankfurt@von-poll.com | Internet: www.von-poll.com

Geschäftsführer:
Daniel Ritter, Sassan Hilgendorf

USt.-Id.-Nr.: 
DE 208 940 728, Finanzamt Frankfurt am Main III.

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