This is what a German Gift Tax & Inheritance Tax Bill really looks like

Understanding a German Inheritance Tax Statement

Inheritance tax in Germany is calculated very differently from the IHT in the United Kingdom. First of all, under German law, not the estate as such is being taxed but each individual beneficiary. Secondly, each beneficiary has an individual tax rate and an individual tax allowance, based on the amount received and the degree of kinship. And, last not least, German law applies the concept of gift tax which means that pre-death lifetime gifts are relevant for the caluclation of German IHT.

Sample German IHT Assessment Notice

Here is a practical real life example of a German Inheritance Tax Statement in a case where the decedent has made lifetime gifts to the beneficiary and – in addition to the pre-death gifts – has gifted half of the estate to the same donee.

 

 

 

 

 

 

 

 

In order to understand a German tax calculation one must know the terminology of the German Gift Tax and Inheritance Tax Code (Schenkungs- und Erbschaftsteuergesetz). The most important terms in the tax bill are:

  • Erbschaftssteuer = Inheritance Tax
  • Schenkungsteuer = Gift Tax
  • Sonstige Erwerbe = Other Gifts (meaning any kind of gift except for the inheritance itself, mostly pre-death gifts or life insurance payments outside of the estate)
  • Vorerwerbe = pre-death gifts and pre-death payments outside of the estate
  • Steuerklasse = German IHT category (based on degree of kinship)
  • Steuersatz = tax rate
  • Freibetrag = personal allowance of the donee (this allowance also depends on the degree of kinship and ranges from only EUR 20,000 between unrelated persons to EUR 500,000 between spouses)

As mentioned above, a major difference between German and UK inheritance tax is that under German law all lifetime gifts do in principle trigger gift tax. Immediately when the gift is made, i.e. not only if the gift was made during the periof of 7 years prior to the date of death of the donor.

All such lifetime gifts (lebzeitige Schenkungen) and any inheritance are added together (if they happen within a period of ten years) and are then the basis on which the combined gift and inheritance tax is being calculated (see the above sample German IHT Tax Bill).

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For more information on German gift & inheritance taxation, on German-British probate matters and on international will preparation see the below posts by the international succession law experts of Graf & Partners LLP:

Or simply click on the “German Probate” section in the right column of this blog.

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seminar_lyndalesIn case you need specific advice in a concrete case or assistance in German probate procedures, feel free to contact the lawyers of the German firm Graf & Partners which are specialized in British-German succession issues. Attorney Bernhard Schmeilzl has years of experience acting as executor and administrator of estates, both in the UK and in Germany. He is an expert in international succesion law and gives lectures and seminars for UK probate solicitors and UK accountants who advise clients with foreign assets.

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The law firm Graf & Partners was established in 2003 and has many years of experience with British-German and US-German probate matters. If you wish us to advise or represent you in a German or cross border inheritance case please contact German solicitor Bernhard Schmeilzl, LL.M. (Leicester) at +49 941 463 7070.

Litigation Costs in Germany: Basic Principles and an Online Cost Calculator

By German Litigation Expert Bernhard H. Schmeilzl, LL.M. (Leicester), admitted to the Munich Bar and qualified to represent clients in Courts of Law throughout Germany

Court fees (Gerichtskosten) in Germany are based on the value of the claim (Streitwert or Gegenstandswert). The same is true for lawyers fees (Anwaltsgebühren) which are regulated by statutory law, the so called Rechtsanwaltsvergütungsgesetz (RVG). We have explained the details of litigation costs in German civil proceedings in this post:

How expensive is a German Lawsuit?

Here are some actual figures (based on the court fee table as of December 2017):

  • If claimant A sues defendant B for payment of EUR 50,000, the claimant must pay court fees of EUR 1,638.
  • If A sues B for EUR 2m, the court fees are EUR 26,800.

The German litigation financing company FORIS offers an English language version of a litigation cost calculator here.

The full court fee must be paid in at the same time the claimant files the “Klageschrift” (statement of claim). Until the court fee is fully paid, the German court will not serve the offocial court papers to the defendant. Thus, a delay in payment to the court can have catastrophic results if a claim is about to become statute barred.

If, at any time during the German civil lawsuit, the parties come to a settlement, the court fees are reduced by 2/3. This is meant to be an incentive for the parties to settle. Also, it reflects the fact that the judge does not have to write a judgement (Urteil). At the same time, the respective litigation lawyers earn a so called settlement fee (Vergleichsgebühr), which is also an incentive to come to an amicable solution.

Under German law, the winning party is entitled to full compensation for the statutory legal fees. However, experienced litigation experts in Germany are usually not willing to work for the statutory fees alone. They will usually ask for higher fees. Such additional fees are then not recoverable from the opponent.

More information on litigation and legal fees in Germany is available in these posts:

For more on German business and corporate law see these posts:

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Experts on German-British and German-American Legal Matters

Since 2003, the German business and corporate law firm Graf Partners LLP specialises in British-German and US-German legal cases. Our German business and corporate lawyers are native speaker level fluent in English, have many years of practical experience with clients from Britiain and the USA and are part of a well established network of law, tax and accounting firms.

Managing partner Bernhard Schmeilzl was admitted as German Rechtsanwalt (attorney at law) to the Munich Bar in 2001 and specialises in international cases ever since, with a focus on German-American and German-English commercial, corporate and also probate cases. In addition to obtaining his German legal exams with distinction, he also graduated from the English University of Leicester where he obtained his Master of Laws degree in EU Commercial Law in 2003.

In 2014, Graf Partners LLP has set up the international litigation department GP Chambers which focuses on providing professional litigation services to British and US-American clients, both on a commercial and a private client level. The Graf Partners litigation lawyers regularly appear before German law Courts throughout the country and provide specialist legal advice, support and advocacy services in all commercial and civil law matters, ranging from contract disputes, corporate litigation and employment, to damage claims, divorces and contentious probate. If you wish us to advise or represent you in a German or cross border case, or if you need an expert report on German law, please call +49 941 463 7070.

Maria Demirci – Our Expert on German Family Law

British and American expats in Germany are somtimes faced with German family law issues. Either because they wish to get their personal and financial affairs in order by way of a pre-nuptial agreement which must “work” (i.e. be enforceable) in Germany as well as in the UK and the USA. Or because the marriage is in trouble and the foreign spouses wish to obtain legal advice on how to separate and divorce in Germany.

German lawyer Maria Demirci is a certified specialist in family law and partner of the Munich based law firm RDS ROGLMEIER DEMIRCI.

She focuses exclusively on family law and is the author of a number of successful publications on German divorce law, alimony, child custody and child maintenance matters.

Maria gives expert family law advice in peaceful and flowery times of a partnership times, but also represents the respective (German or foreign) spouse in not so romantic times of a marriage, i.e. during separation and divorce as well as – if unavoidable – child custody battles.

Maria is based in Munich but can represent clients in all courts of law throughout Germany. In international cases, where necessary, she teams up with British or US family lawyers to ensure that her international clients are provided with a solution which holds water in all relevant jurisdictions.

In case you require competent legal advice on German family law or legal representation in German court proceedings, do not hesitate to contact Maria Demirci at RDS ROGLMEIER DEMIRCI on +49 (0) 89 5390 63 89-0.

For more information on German family law also see these posts:

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Cross Channel Lawyers (CCL) is a network of German lawyers who specialise in German-British and German-American legal issues. CCL was established in 2003 by the German law firm Graf & Partners and its international litigation department GP Chambers. Our lawyers have many years of practical experience with British-German and US-German family law and probate matters, including the representation of clients in German litigation and arbitration proceedings. If you wish us to advise or represent you in a German or cross border legal matter please send an email or call us on +49 941 463 7070.

Forensic Accountant for Business Litigation in Germany

You need to understand German company accounts?

In order to win a business or corporate law suit, understanding the numbers is often equally important as knowing the legal aspects of the case. The same is true if you plan to acquire a German business. Thus, the German-British litigation lawyers as well as the M&A experts at Graf & Partners (www.grafegal.com) regularly team up with German forensic accountant Hermann Werle.

Hermann obtained his degree in business administration from Regensburg UAS in 1982. Throughout his 25 year career he then worked as inhouse accountant, head of controlling, CFO and company director / CEO for renowned German and international companies and was involved in a number of mergers including Mallinckrodt, Sherwood Davis & Geck and U.S.-Surgical. Thus, Hermann gained a wealth of professional experience in various industrial sectors. While his core competence is finance, he also has practical experience in HR, IT, purchasing, warehousing and distribution.

In 2014, Hermann set up his own financial consultancy firm and provides professional advice to German and international firms, often in collaboration with the German and British litigation lawyers of Graf & Partners. His main focus is on the areas:

  • forensic accounting in cross-border litigation cases and
  • German-British and German-American merger & acquisition deals (financial due diligence)

We have worked with Hermann Werle on dozens of business litigation cases as well as international mergers. Our German as well as our international clients have always been extremely impressed by his skills, in particular his ability to break down and explain the most complex situations to non-accountants, i.e. to litigation lawyers and judges.

More information on litigation and legal fees in Germany is available in these posts:

For more on German business and corporate law see these posts:

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Experts on German-British and German-American Legal Matters

Since 2003, the German business and corporate law firm Graf Partners LLP specialises in British-German and US-German legal cases. Our German business and corporate lawyers are native speaker level fluent in English, have many years of practical experience with clients from Britiain and the USA and are part of a well established network of law, tax and accounting firms.

Managing partner Bernhard Schmeilzl was admitted as German Rechtsanwalt (attorney at law) to the Munich Bar in 2001 and specialises in international cases ever since, with a focus on German-American and German-English commercial, corporate and also probate cases. In addition to obtaining his German legal exams with distinction, he also graduated from the English University of Leicester where he obtained his Master of Laws degree in EU Commercial Law in 2003.

In 2014, Graf Partners LLP has set up the international litigation department GP Chambers which focuses on providing professional litigation services to British and US-American clients, both on a commercial and a private client level. The Graf Partners litigation lawyers regularly appear before German law Courts throughout the country and provide specialist legal advice, support and advocacy services in all commercial and civil law matters, ranging from contract disputes, corporate litigation and employment, to damage claims, divorces and contentious probate. If you wish us to advise or represent you in a German or cross border case, or if you need an expert report on German law, please call +49 941 463 7070.

“See the Big Picture”: The Preparation of International Wills

One-Day Workshop for English Wills & Probate Solicitors

Clients these days often own foreign assets, have close relatives (i.e. future beneficiaries) who live abroad or even move to a non-UK country themselves. In all of these cases, a “standard” English last will and testament does not adequately cover all the client’s needs. Foreign IHT consequences, for example, are often completely ignored. As is the fact that many European jurisdictions do not recognise an English trust for probate and IHT purposes. British and US expats (and their lawyers) must be aware that standard Common Law estate planning techniques are likely to fail to protect wealth in cross-border situations and may even produce unintended, counter-productive results.

The simple advice “set up an additional will for your foreign assets” is rarely the best solution because the existence of various wills even increases the risk of conflicting interpretation by executors, probate judges and the respective national tax authorities. The existence of more than one will also creates higher costs and usually slows down probate significantly, because probate registrars usually request to see (and have translated) all existing wills, even those who do not directly apply to their country (because that is what they want to verify).

The German-British probate expert Bernhard Schmeilzl specialises in international wills and estate planning for British-German and British-Austrian families since 2001. He knows the typical problems that arise when an English will lands on the desk of a German or Austrian probate registrar or vice versa. Most succession lawyers only know the rules and practical operations of their own jurisdiction. The probate experts at Graf & Partners, however, apply for hundreds of grants each year in England, Germany and Austria, acting either as probate lawyers for personal representatives or acting as executors themselves.

These combined 20+ years of practical experience in non-contentious as well as contentious probate matters in Germany, Austria and the UK make the lawyers of Graf & Partners sought-after lecturers and speakers.

German solicitor Schmeilzl regularly conducts legal seminars and practical workshops on international wills and estate planning as well as on how to obtain probate in Germany, Austria and England. Popular topics for such inhouse seminars for British and German law firms are:

Preparing International Wills: A Checklist for Clients and their Lawyers

British Expats Beware of Foreign Succession Laws and Foreign IHT

International Wills: What your English Solicitor does not tell you (but should)

If a British Testator relocates to Europe…

The Perils of the “Free of Tax” Clause in English Wills

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The law firm Graf & Partners and its German-English litigation department GP Chambers was established in 2003 and has many years of experience with British-German and US-German probate matters, including the representation of clients in contentious probate matters. If you wish us to advise or represent you in a German or cross border inheritance case please contact German solicitor Bernhard Schmeilzl, LL.M. (Leicester) at +49 941 463 7070.

British Expats Beware of Foreign Succession Laws and Foreign IHT

Children of British Expats in Europe often are entitled to the Estate without even knowing it. EU Succession Laws are full of surprises.

British expats who are resident in Europe, let’s say in Germany, Austria, France or Spain, rarely are aware that ever since the introduction of the EU Succession Regulation (August 2015), if they pass away while being resident in that country, the Inheritance and Succession Laws of that country of residence will most likely apply to their estate. This is due to the fact that the entire European Union (except for the UK, Denmark and the Republic of Ireland) have adopted the EU Succession Regulation which states that the laws of the country in which the deceased had his or her last habitual residence must apply. Habitual residence is easier to achieve than domicile.

Thus, a British national who may consider him- or herself to be domiciled in England, can easily be considered by the German, Austrian, French or Spanish probate court to have established habitual residence outside the UK. Then, from a EU law perspective, these national succession rules (i.e. German, Austrian, French inheritance laws etc.) do apply to the entire estate, including the assets situate within the UK. English law takes a different view on this issue which may lead to horrendous legal disputes and contentious international probate cases which drag on for years and block the administration of the estate both in the UK and in Europe.

Who inherits if a British expat dies abroad?

German Intestacy Rules Overview Chart

The application of foreign succession laws can lead to surprising results. Pleasant or unpleasant, depending on the degree of kinship with the deceased. Under German succession laws, for example, the surviving spouse has a much weaker position compared to the intestacy rules in England and Wales as well as Scotland. Details are explained here and here.

The stunning results are not only caused by different national rules of intestacy. These could easily be avoided by simply creating a will. But even if the British expat has set up a valid will, the inheritance and succession laws of continental EU countries (including Germany, Austria and France) often apply statutory elective share rules, also known as forced heirship or compulsory inheritance share rules. For practical implications of such forced heirship rules see here and here.

By the way: National inheritance tax laws of the respective country of residence do also apply. This cas always been the case and has nothing to do with the EU Succession Regulation and will also not be affected by Brexit. National tax laws are what they are. Still, British expats should inform themselves about the respective IHT laws of their country of residence. Unless they live in Austria because Austria does not levy any inheritance tax (as of now).

In order to avoid unpleasant surprises or probate problems, expats should definitely have their last will checked by an international succession law expert within the country of residence. English solicitors are rarely capable or even willing to consider foreign law implications (for some examples how English wills can lead to catastrophic results outside the UK see here).

If you wish to instruct Graf & Partners LLP to draft a Will or to team up with a foreign lawyer to advise in specific areas of German or Austrian law, please feel free to complete the questionnaire and contact our German succession and probate law experts. Lawyers can create a tailor-made Last Will only if they are fully informed about the testator’s personal situation and his/her objectives. In order to draw up a Last Will that fully meets the clients individual requirements, Graf Partner LLP uses a comprehensive questionnaire and Will preparation checklist (available for download here).  This checklist also helps to facilitate an effective and individual preparation for the personal meeting at the firm.

German solicitor Bernhard Schmeilzl also conducts inhouse seminars for British and American lawyers and accountants who advise clients with foreign assets or who have family abroad. More on these seminars here: Advising Clients with Assets Abroad

For more information on German-British probate matters and international will preparation see the below posts by the international succession law experts of Graf & Partners LLP:

Or simply click on the “German Probate” section in the right column of this blog.

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The law firm Graf & Partners and its German-English litigation department GP Chambers was established in 2003 and has many years of experience with British-German and US-German probate matters, including the representation of clients in contentious probate matters. If you wish us to advise or represent you in a German or cross border inheritance case please contact German solicitor Bernhard Schmeilzl, LL.M. (Leicester) at +49 941 463 7070.

The Perils of the “Free of Tax” Clause in English Wills

English lawyers and tax consultant: beware of personal liability when designing Wills for families who either may own assets abroad or who wish to make gifts to beneficiaries living outside the UK.

The harmless seeming “free of tax” wording as is commonly used by English solicitors when drafting wills for English clients can lead to unexpected quarrels between executors and beneficiaries. Why?

If a UK estate exceeds the UK IHT nil-rate band of currently £325k, HMRC levies 40% inheritance tax. From the perspective of most European countries, this is a staggeringly high tax rate. Austria, for example, knows no IHT at all. In Germany, the inheritance tax rate between close relatives starts at 7%.

Another major difference between the IHT systems of the UK and most continental EU countries is that outside the UK not the estate as such is being taxed but instead each individual beneficiary, sometimes at very different tax rates which depend on the relation to the deceased. Thus, if a beneficiary who receives a gift under an English will lives in such a country (e.g. Germany, France or Spain), that beneficiary will be subject to (additional) inheritance taxation within the country of his / her residence.

And here is where it is getting risky for English solicitors

When drafting an English will, most British solicitors will usually write:

“XY shall receive free of charge the following assets…”

From a British point of view, this means that the gift is not to be reduced by IHT. Instead, from a strictly financial perspective, the portion of UK IHT attributable to that gift shall be borne by the estate, i.e. by those beneficiaries who shall receive the residuary estate. HMRC is not concerned with who shall effectively bear the burden of IHT. From a UK perspective: So far, so good.

However, as we have seen above, if the beneficiary of a specific gift resides and lives in, for instance, Germany (and is therefore deemed to be a tax resident in Germany within the meaning of § 2 ErbStG), then that beneficiary must also pay the German IHT on the value of the gift. This is regardless of any sort of British inheritance taxes, since there is no double taxation agreement between the UK and Germany in the field if inheritance tax.

To illustrate, here is a simple case study in a British-German setting (but the problem also arises in British-French, British-Spanish etc inheritance cases):

An uncle, who is English and lives in London, in his last will gives a gift of €100,000 to his nephew who – at the date of the uncles’s death – is resident in Germany. The solicitor drafting the will includes the wording “free of any tax”. This scenario creates two legal problems:

Problem 1: The nephew (or his German lawyer) will argue that the wording “free of any tax” also applies to German inheritance tax. Under German law, the nephew only has a personal IHT allowance of €20,000, which means that the remaining amount (€80,000) is subject to German IHT. In this case (a nephew receiving €100,000), the tax rate is 20%. If the amount or the relation is different, there can be very different tax rate (detaiils of German IHT rates are explained here).

The nephew will write to the executor and request that he pay the German inheritance tax bill of €16,000. The Executor will swiftly inform the nephew that neither the deceased nor the solicitor who set up the will did have German inheritance tax in mind when drafting the will. One can already see the wonderful dispute arising because of the term “free of any tax”. If the deceased was someone who was fully aware of the fact that one has to pay personal inheritance tax in Germany as recipient of a gift, then the nephew can reasonably argue that his uncle had indeed meant “free of inheritance tax” under both regimes. If the deceased hat, on the other hand, never lived in Germany and had never heard of that German tax concept, then it is the more convincing interpretation of the will that the words “free of tax” really only mean “free of UK IHT”.

Problem 2: Although there is no double taxation agreement between the UK and Germany with regard to inheritance tax, German tax law still offers unilateral relief in certain circumstances. In our example case study, the nephew would be able to set off the respective UK IHT against his tax debt, if his gift would have been reduced by UK IHT. However, if the “free of any tax” clause is interpreted as meaning that the estate has to pay also the German IHT, then the nephew personally bears no UK IHT burden. Within the logic of German IHT, the German beneficiary can thus also NOT claim unilateral relief, i.e. he cannot be given any tax credit in Germany!

The result being that the executor has to pay both UK IHT and foreign IHT on the same gift without being able to claim any foreign tax relief. A very unsatisfactory outcome, especially for the beneficiaries receiving the residuary estate.

This simple case study shows that an English solicitor, by designing a will without the adequate knowledge of the German (French, Spanish etc) tax system can cause considerable tax harm and create great legal quarrels between the various beneficiaries.

Lawyers in different countries must therefore work together in assessing the potential tax consequences in each individual country in order to avoid any pitfalls and nasty surprises.

A possible solution with regard to Germany might be the following wording:

My nephew shall receive a gift of …. With regard to any inheritance tax that may arise in the UK, my nephew shall receive this “free of tax” i.e. the inheritance tax incurred in the UK is not to be paid out of the value of the share deposit, but from other assets. In addition, my nephew shall also receive, as further gift, a sum of money equivalent to that required for any settlement of the IHT in the UK. With regard to taxation, my nephew shall therefore bear the IHT which is attributable to the gift and shall therefore be entitled to deduct the UK IHT by way of deduction from German inheritance tax (§ 21 ErbStG).

Lawyers can create a tailor-made Last Will only if they are fully informed about the testator’s personal situation and his/her objectives. In order to draw up a Last Will that fully meets the clients individual requirements, Graf Partner LLP uses a comprehensive questionnaire and Will preparation checklist (available for download here).  This checklist also helps to facilitate an effective and individual preparation for the personal meeting at the firm.

If you wish to instruct Graf & Partners LLP to draft a Will or to team up with a foreign lawyer to advise in specific areas of German or Austrian law, please feel free to complete the questionnaire and contact our German succession and probate law experts.

German solicitor Bernhard Schmeilzl also conducts inhouse seminars for British and American lawyers and accountants who advise clients with foreign assets or who have family abroad. More on these seminars here: Advising Clients with Assets Abroad

For more information on German-British probate matters and international will preparation see the below posts by the international succession law experts of Graf & Partners LLP:

Or simply click on the “German Probate” section in the right column of this blog.

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The law firm Graf & Partners and its German-English litigation department GP Chambers was established in 2003 and has many years of experience with British-German and US-German probate matters, including the representation of clients in contentious probate matters. If you wish us to advise or represent you in a German or cross border inheritance case please contact German solicitor Bernhard Schmeilzl, LL.M. (Leicester) at +49 941 463 7070.

Careful with M&A Asset Deals in Germany

Pitfalls of German Contract Law (Part 3):  Many Asset Deal Purchase Agreements must be in Notarial Form to be Valid in Germany

German Law requires certain transactions to be recorded before a Civil Law Notary in order for these agreements to be valid and enforceable. The list ranges from pre-nuptial and marriage agreements, to any real estate related transaction, to the formation of German companies and stock corporations.

One aspect is, however, sometimes overlooked even by German corporate lawyers. Namely, the fact that even assets deals may have to be recorded before a German notary if the selling party in this M&A asset deal transfers its entire business operation (Geschäftsbetrieb) or a defined branch of its business, i.e. an entire sector of the business operation (Teilgeschäftsbetrieb).

The relevant statute is sec. 311 b para. 3 German Civil Code which states:

Section 311b BGB:

Contracts on plots of land, assets and an estate

(1) A contract by which one party agrees to transfer or acquire ownership of a plot of land must be recorded by a notary. A contract not entered into in this form becomes valid with all its contents if a declaration of conveyance and registration in the Land Register are effected.

(2) A contract by which one party agrees to transfer his future property or a fraction of his future property or to charge it with a usufruct is void.

(3) A contract by which one party agrees to transfer his present property or a fraction of his present property or to charge it with a usufruct must be recorded by a notary.

 

If, therefore a German company (GmbH) or corporation (AG) sells its assets and the agreement contains – which is often the case – a so called “catch all assets clause”, then the entire agreement must be recorded by a German Civil Law Notary, even if the assets do not consist of real estate (plots of land etc).

The statute does, however, usually not apply if the seller is a sole trader oder a partnership, i.e. a German Gesellschaft bürgerlichen Recht (GBR), a German Offene Handelsgesellschaft (OHG) or a German Kommanditgesellsachaft (KG), but the details are tricky.

If this formal requirement of German law is not observed in a German M&A assed deal, the entire agreement is null and void (nichtig) which may be found out even many years later. In which case, obviously, all hell breaks loose. This aspect should therefore not be taken lightly.

If the parties wish to avoid the involvement of a German Notary in the transaction, they can either do without a catch all clause or they can agree on English or US law to apply to the asset deal which may, however, create other legal problems. Please note that if the deal includes the transfer of German real property (immoveables in Germany), then the involvement of a German notary is necessary no matter what. The same is true if the shares of a German Limited Liability Company are to be sold and transferred.

For more on German business and corporate law see these posts:

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Experts on German-British and German-American Legal Matters

Since 2003, the German business and corporate law firm Graf Partners LLP specialises in British-German and US-German legal cases. Our German business and corporate lawyers are native speaker level fluent in English, have many years of practical experience with clients from Britiain and the USA and are part of a well established network of law, tax and accounting firms.

Managing partner Bernhard Schmeilzl was admitted as German Rechtsanwalt (attorney at law) to the Munich Bar in 2001 and specialises in international cases ever since, with a focus on German-American and German-English commercial, corporate and also probate cases. In addition to obtaining his German legal exams with distinction, he also graduated from the English University of Leicester where he obtained his Master of Laws degree in EU Commercial Law in 2003.

In 2014, Graf Partners LLP has set up the international litigation department GP Chambers which focuses on providing professional litigation services to British and US-American clients, both on a commercial and a private client level. The Graf Partners litigation lawyers regularly appear before German law Courts throughout the country and provide specialist legal advice, support and advocacy services in all commercial and civil law matters, ranging from contract disputes, corporate litigation and employment, to damage claims, divorces and contentious probate. If you wish us to advise or represent you in a German or cross border case, or if you need an expert report on German law, please call +49 941 463 7070.

If a British Testator relocates to Europe…

… the surviving spouse may be in for an unpleasant surprise

Since 2015, according to the rules of the EU Succession Regulation, the criterion “last habitual residence” of the deceased determines which succession laws apply to the estate. If, for instance, a British national moves to Spain, Germany or France and later on dies there, then the respective national succession laws, i.e. Spanish, German or French succession laws, do apply (except with regard to UK immoveables).

This can cause surprising results, especially if the British expat or retiree did not have a will, because German, French, Spanisch or Austrian intestacy rules vary significantly from those in England & Wales, Scotland or Ireland.

Under German intestacy rules, for example, the surviving spouse only inherits 1/2 of the estate if the deceased had children. And it’s even worse if the deceased did not have any children but his parents or siblings are still alive. In this instance, the surviving (British) spouse is not the sole beneficiary, but instead only inherits 3/4 of the estate. The remaining 1/4 share goes to the parents or (if they are no longer alive) to the siblings of the deceased spouse. This usually comes as quite a shock to the surviving spouse. For details on German intestacy rules see here.

Beware of the “Elective Share” Risk

These foreign rules of intestacy can, of course, be avoided by simply making a last will and testament (an English will is accepted as valid throughout Europe, see here). However, even then there can still be serious implications resulting from the foreign succession rules, which often neither the testator nor his/her spouse nor their English solicitor who drafted the English will are aware of.

The often overlooked problem is that the inheritance laws of Germany, France and many other European countries apply the concept of a statutory compulsory share (mandatory elective share), which means that certain close relatives (usually spouses, offspring and parents) are entitled to a certain share of the estate no matter what, i.e. even if they have been expressly disowned in a will. The concept goes back to the Napoleonic Code (French Civil Code) which contains compulsory inheritance provisions for certain relatives. In particular, children are “protected heirs” and cannot be disinherited. German civil law and the succession laws of many other countries have adopted this concept.

Thus, the (British) children or grandchildren of a British citizen who has permanently moved to Germany or France may be entitled to a huge portion of the estate (up to 50 percent of the entire estate!), even if the last will does not mention them as beneficiaries or only gives them a smaller portion of the estate.

In many cases, these (disinherited) relatives are not aware of their right to make such a claim. However, if they speak to a probate lawyer in that country or if they stumble across this post, they may approach the surviving spouse of the expat / retiree and demand their share.

Thus, if a British national plans to work or retire in another European country, he or she should (i) make a will in order to avoid foreign intestacy succession rules applying and (ii) have that will checked by a succession and probate lawyer who is well versed in international inheritance laws to avoid unpleasant surprises for the beneficiaries later on.

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The law firm Graf & Partners and its German-English litigation department GP Chambers was established in 2003 and has many years of experience with British-German and US-German probate matters, including the representation of clients in contentious probate matters. If you wish us to advise or represent you in a German or cross border inheritance case please contact German solicitor Bernhard Schmeilzl, LL.M. (Leicester) at +49 941 463 7070.

Bernhard Schmeilzl is an expert in international will preparation, estate planning and cross border probate. He also conducts inhouse seminars for British and American lawyers and accountants who advise clients with foreign assets or who have family abroad. More on these seminars here: Advising Clients with Assets Abroad

For more information on German-British probate matters and international will preparation see the below posts by the international succession law experts of Graf & Partners LLP:

Or simply click on the “German Probate” section in the right column of this blog.

LGBT Friendly Law Firms in Germany, Austria and Britain

Although Germany and Britain are comparatively liberal and progressive societies, we are fully aware that the struggle against hate, discrimination and bigotry is far from over.

Our firm of German and British lawyers supports openness, diversity and equal rights for all sexual orientations and gender identities.

We welcome clients from the LGBT community both in Germany and the UK and we provide legal advice in all areas of law, from family law (e.g. same sex marriage, same sex couple adoptions), the preparation of (German or international) last wills, estate and succession planning for same sex couples to – where necessary – anti-discrimination measures at the workplace or elsewhere.

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The law firm Graf & Partners was established in 2003 and has many years of experience with British-German and US-German legal matters.The Anglo-German litigation lawyer team of GP Chambers is well equipped to advise and represent clients from the UK, the USA and other English speaking countries. If you wish us to advise or represent you in a German or international legal matter, just call our main office on +49 941 463 7070.