Avoid family disputes – bequeath your property while you are still alive!

Dividing a property among several heirs is not easy – and can easily lead to family disputes. To avoid this, many testators prefer to take care of it while they are still alive. How can this be done, and what should be considered?

If you haven't specified your inheritance in a will, the law decides the order of succession. Heirs include spouses, children or grandchildren, parents, or siblings. If, for example, the inheritance goes to three children, it would be divided among them. Each child would receive one-third. While dividing money is relatively straightforward, dividing real estate among three people is more complicated. This situation often presents the heirs with significant challenges. Such an inheritance marathon takes time and effort, even if the heirs are in agreement.

Transferring the inheritance during one's lifetime

The awareness of the potential for family disputes is leading more and more Germans to transfer their inheritance to their descendants while they are still alive. This option is available for real estate, money, and businesses. In official terms, this is called "anticipated inheritance." Firstly, this allows you to decide who receives what. Secondly, it can even reduce inheritance tax and the compulsory share of the estate. However, it is advisable to seek professional advice from a real estate expert. Anticipated inheritance is particularly beneficial when the property is to be transferred to specific individuals such as a spouse or children. This allows you, for example, to ensure a smooth start to your children's professional lives or to provide financial security for your spouse.

Transfer agreement and usufruct rights

However, a preliminary inheritance should not be confused with a simple gift. If the mortgage is not yet paid off or the house is encumbered with a lien, these debts will also be transferred. Furthermore, a transfer is usually subject to conditions. If you transfer all your assets – whether money or real estate – during your lifetime, you are essentially relinquishing control of your livelihood. Therefore, it is all the more important to secure your livelihood by retaining rights to the assets that allow you to use and manage them until your death. This is called a usufruct. It is advisable to regulate your rights to the assets in the transfer agreement, taking all conceivable interests into account.

If you transfer your property to your future heirs prematurely, a lifelong right of residence for the transferor is usually stipulated in the contract. This means your apartment cannot be sold or rented out as long as you live there. Furthermore, it is advisable to include reversionary rights in the contract. These come into play, for example, if the heir wants to sell the property or is in debt. Should personal bankruptcy loom, you can reclaim your inheritance so that it is not lost entirely.

To avoid losing track of things as a testator, it is advisable to consult a real estate professional. They can advise you on how best to secure your real estate inheritance.

Are you wondering what to do with your inherited property? Contact us. We'd be happy to advise you.

You need more information:

https://www.destatis.de/DE/Presse/Pressemitteilungen/2019/08/PD19_309_736.html

https://de.wikipedia.org/wiki/Erbschaft

https://de.statista.com/statistik/daten/studie/217175/umfrage/anzahl-erbschaften-schenkungen-in-deutschland/

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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