Are there ways to avoid inheritance tax?
August 25, 2023 | 45,00 EUR | answered by Ella König
Dear Mr. Tax Advisor,
I am reaching out to you today as I have a question regarding inheritance tax and I am hoping for your expertise. My name is Jürgen Voigt and I am about to inherit a substantial sum of money. My parents passed away some time ago and left me a considerable fortune.
My concern is that a large portion of the inheritance may have to be given to the government through inheritance tax. I am wondering if there are ways to avoid or at least minimize this tax so that I can keep more of the wealth that my parents left me.
I am aware that there are legal regulations regarding inheritance tax and that it is important to comply with them. However, I would like to know if there are legal strategies to reduce the tax burden. Are there, for example, tax exemptions that I can take advantage of? Or are there specific gifting methods that could help reduce the tax burden?
I would greatly appreciate it if you could provide me with an overview of possible solutions so that I can better prepare for the upcoming inheritance situation. I would like to preserve my parents' inheritance to the fullest extent and I am willing to seek professional assistance to achieve this.
Thank you in advance for your help and advice.
Sincerely,
Jürgen Voigt
Dear Mr. Voigt,
Thank you for your inquiry regarding inheritance tax. It is understandable that you are concerned that a large part of the inheritance could be lost due to tax payments. I am happy to provide you with an overview of possible solutions to minimize the tax burden and preserve your inheritance to the best of your ability.
First and foremost, it is important to mention that in Germany, there are tax-free allowances for inheritances. These allowances vary depending on the relationship between the deceased and the heirs. For example, the tax-free allowance for children is 400,000 euros, while for spouses it is 500,000 euros. Anything above these allowances is subject to inheritance tax. Therefore, it may be sensible to distribute the inheritance among multiple individuals in order to take advantage of multiple tax-free allowances.
Furthermore, in Germany, there is the option to make lifetime gifts. There are also tax-free allowances for these gifts, which can be used every 10 years. By making targeted gifts during your lifetime, you can transfer wealth and reduce the tax burden for your heirs.
Additionally, there are various strategies to minimize inheritance tax in Germany. It is advisable to seek advice from a tax consultant who can develop individual solutions for your specific situation. For example, it may be possible to optimize wealth transfers in the context of business succession or to achieve tax benefits through the establishment of foundations.
In conclusion, it is important to address the issue of inheritance tax early on and seek professional advice. This is the only way to ensure that you can preserve your inheritance and minimize the tax burden.
I hope that this information has been helpful to you. If you have any further questions or require more detailed advice, please do not hesitate to contact me.
Best regards,
Ella König
Tax Consultant
