Giving instead of bequeathing: Transferring property during your lifetime
If you already know that you or your siblings will inherit a property from a relative, it may make sense not to wait until the death. Instead, an anticipated inheritance is often an option, where the deceased gives away their assets while they are still alive.
Why an anticipated inheritance can make sense
Transferring a property during your lifetime not only creates legal clarity, but can also offer tax advantages. As a house or flat cannot be divided up as easily as money, you can avoid potential conflicts among the heirs by transferring it early. In addition, it can be difficult for descendants to pay inheritance tax and pay out siblings in the event of an inheritance, which could lead to a forced sale in the worst case.
Utilise tax allowances
Anyone who makes a gift during their lifetime can claim high tax-free allowances. For children, the tax-free amount for gifts is 400,000 euros per parent, and this can be utilised every ten years. The market value of the property serves as the basis for the tax calculation. Registered residential or usufructuary rights reduce the value and therefore also the tax burden, as this makes the property more difficult to sell.
Securing residential rights and usufruct
Many property owners fear losing their rights to the property after the gift. However, residential and usufructuary rights offer security. With a usufructuary right, the donor can continue to use the property or earn rental income. They bear the running costs themselves. These rights are recorded in the land register and protect the donor.
Special cases and reclaims
The notarised contract can stipulate rights of reclaim, for example in the event of gross ingratitude on the part of the donee. It is also possible to treat distant relatives such as nieces or godchildren in the same way as your own children for tax purposes by adopting them in order to give them high tax-free allowances when donating a property.
Advantages of clear ratios
Nobody likes to deal with their own death. However, early and written agreements often save descendants from later disputes. Verbal promises without a contractual basis are not valid after the death of the testator. With a transfer that is regulated in good time, you create legal certainty and tax advantages for your heirs.
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Robert Schüßler
Property valuer (EIA and IHK)
