What allowances apply to inheritance tax?
March 7, 2022 | 50,00 EUR | answered by Alwin Widmann
Dear tax advisor,
My name is Alice Bacigalupo and I am currently dealing with the topic of inheritance tax, as there is an inheritance situation in my family circle. It concerns the estate of my deceased grandfather, which is to be divided among my parents and me as his granddaughter. Since I am not familiar with the topic of inheritance tax, I would like to know what exemptions apply to inheritance tax.
My grandfather has left a substantial estate that is to be divided among my parents and me as his granddaughter. I am concerned that we may have to give a large part of the inheritance to the state due to inheritance tax, leaving less for us. Therefore, it is important for me to know what exemptions exist in order to assess whether we may need to pay taxes and how much they could be.
I have already researched online, but the information was often unclear and confusing. Therefore, I hope that you, as an expert in the field of inheritance tax, can help me and provide me with the applicable exemptions. Are there ways to save taxes or utilize exemptions to reduce the tax burden?
I thank you in advance for your support and look forward to your helpful information.
Sincerely,
Alice Bacigalupo
Dear Mrs. Bacigalupo,
Thank you for your inquiry regarding inheritance tax. It is understandable that you are concerned about the tax burden when dividing your grandfather's estate. I can provide you with more information on the tax-free allowances for inheritance tax to help you assess your situation.
Firstly, it is important to know that in Germany there are tax-free allowances that are taken into account when calculating inheritance tax. These allowances depend on the relationship between the deceased and the heirs. For example, the tax-free allowance for spouses and registered partners is 500,000 euros, for children and stepchildren 400,000 euros, and for grandchildren 200,000 euros. These allowances apply per person, so you and your parents have individual allowances.
If the inheritance exceeds the tax-free allowance, the amount above that will be taxed at an inheritance tax rate. The rate of tax depends on the amount of the inheritance and the relationship between the deceased and the heirs. Direct descendants like children and grandchildren generally have lower tax rates than more distant relatives or non-relatives.
There are various ways to save on taxes or reduce the tax burden. One option is to plan the estate in advance to avoid potential tax pitfalls. Lifetime gifts can also be an option to gradually transfer wealth and maximize tax-free allowances. However, it is important to note that gifts may also be subject to tax.
It is advisable to consult with a tax advisor or specialist in inheritance law early on to explore individual planning options and consider tax aspects. Professional advice can help you minimize the inheritance tax burden and plan your estate optimally.
I hope this information is helpful to you and I am available to assist you with any further questions.
Sincerely,
Alwin Widmann
