Making arrangements for one“s estate early on with a will or contract of inheritance
Inheritance is set to become an ever more important topic in the coming years, which is why it is more crucial than ever to think about the distribution of one“s estate at an early stage.
In principle, every testator can determine how their estate should be distributed among the heirs having regard to the relevant statutory regulations, e.g. those concerning claims to a compulsory portion. We at the law firm GRP Rainer Rechtsanwälte note that if the testator fails to lay out his testamentary dispositions in a will or contract of inheritance then the rules of intestate succession automatically kick in. According to these rules, the spouse and relatives inherit. The result is not necessarily in line with the testator“s wishes, as the rules generally entail the spouse not being able to become the sole heir if there are other relatives, for example the testator“s nephew, who are entitled to inherit. In these instances, the spouse or life partner is typically only able to inherit 75 per cent. Furthermore, it is possible for disputes to arise among the heirs. While the distribution of cash is relatively simple under the rules of intestate succession, this often proves to be more difficult in the case of other assets such as jewellery and, in particular, real estate.
To prevent these kinds of developments, one can take precautionary measures and prepare a will or contract of inheritance. The testator can lay out in a will who is to inherit. In doing so, claims to the compulsory portion need to be accounted for. These amount to half of the statutory share. It is equally important to be mindful of clear and legally correct wording to avoid misunderstandings and the possibility of the will having to be interpreted by a court.
The so called „Berliner Testament“ (Berlin will) is popular among married couples. Here, spouses mutually appoint each other as sole heirs and normally designate their children as final heirs, i.e. the latter do not inherit until after the second spouse has passed away. That being said, a Berliner Testament does have a strong binding effect, with it only being possible to change the joint instructions unilaterally under certain circumstances.
One should also bear in mind tax considerations and make optimal use of tax allowances. To this end, it might make sense for the testator to make gifts during his lifetime. Lawyers who are experienced in the field of succession law can advise on all matters relating to wills and contracts of inheritance.
GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.
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50667 Cologne
Phone: +49 221-27 22 75-0
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