Germany: Inheritance law and tax exemption guidelines

In Germany, inheritance and taxation are governed by specific legal frameworks regarding succession and tax-free allowances. Under statutory succession for spouses in a community of accrued gains, a surviving spouse typically inherits half of the estate if children are present, while the children share the remaining half.

To avoid disputes within an inheritance community, such as disagreements over property or the need for one heir to be paid out, legal instruments like a ‘Berliner Testament’ can be used to name spouses as sole heirs initially.

Inheritance tax liability depends on the value of the estate and the degree of kinship. Significant tax-free allowances are provided: spouses and registered partners can receive up to 500,000 euros, children up to 400,000 euros per parent, and grandchildren up to 200,000 euros. For more distant relatives or non-relatives, such as friends or partners, the allowance is significantly lower at 20,000 euros. Tax rates are determined by three distinct tax classes based on the relationship to the deceased.