Risks of holding a German bank account without being resident in Germany
Our law office advises in many areas of English-German law. One recurring problem which our clients usually did not see coming is the following situation: Someone who owns a German bank account develops dementia and eventually loses legal capacity. If that person is resident in Germany, there is no issue because that person will either have a German style lasting power of attorney or the German equivalent of the court of protection (the “Betreuungsgericht”) will appoint a “Betreuer” (deputy) who can then act on behalf of the person who lacks legal capacity.
Non-German residents can’t access their bank account anymore
However: If the person does not live in Germany at the time of losing legal capacity, either because they never did or because they initially lived in Germany but later relocated to the UK, then a tricky legal issue arises:
- German banks do NOT accept Lasting Powers of Attorney made in the UK
- even more surprisingly, most German banks (especially Deutsche Bank and Postbank) do also NOT even accept official court orders issued by English court of protection, even if the order is being certified and apostilled and translated into German!
The bank’s excuse usually is that their inhouse lawyers are unfamiliar with English law and that they therefore cannot assess whether the English court order is valid and what rights the court appointed deputy has. In my view not convincing, because the court of protection orders are usually quite specific. However, in my experience, it is not much use trying to argue with German banks.
What makes matters even more absurd is the fact that German courts of protection usually do not accept such cases, arguing that – lacking a German residence of the bank account holder – they do not have jurisdiction. And even if a German court of protection accepts an application for a German (!) court of protection order, then that German court needs to be convinced of the lack of legal capacity, which means that either the existing medical expert opinions from England need to be translated or – more realistically – the german court will want to obtain an independent new medical expert opinion.
I could go on and on about potential complications and costs.
How to avoid being cut off from one’s own German bank account
It should have become clear that anyone who owns a bank account in Germany should take precautions against running into this problem. In a current, rather dramatic case, a German national who held more than 600,000 Euros on a German bank account, his entire life savings, moved to England when he retired at age 65, because his daughter had married an Englishman and lived there with her family (i.e. the grand-children). He did keep his German savings account and did not think much of it. About 10 years later he developed dementia and eventually moved into an English care home. Another two years later his funds in the UK had been used up and the daughter – the court appointed deputy – wrote to the German bank to access her father’s accounts, ssuming that this would be no problem at all. Far from it. It took her more than two years legal battle in Germany to finally get access to her dad’s money. All this time, she and her husband had to pay the English care home fees out of pocket.
The simple ways to avoid getting into this legal mess are:
- either to close out the German bank account and transfer the monies to the country of residence early on, OR – in case you wish to keep the German bank account –
- to grant a trusted individual a formal power of attorney which is recognised by German banks
Such power of attorney (Vollmacht) can either be a so called “Generalvollmacht” in notarial form, i.e. signed before a german notary public, or the Vollmacht can be registered directly with the respective German banks.
More on UK-German estate planning and international probate in these posts
- Most Germans die without a Will (German Intestacy Rules)
- The Perils of German IHT and Gift Tax
- Basics of German Inheritance and Succession Law
- Executors and Trustees in German Inheritance Law
- How to apply for a German Grant of Probate
- The Infamous German Community of Heirs – And how to avoid it
- International Wills and Estate Planning for British-German Families
- Prove German Wills for English Probate
- Disputed Wills and Contentious Probate in Germany
- Disinherit your no-good children? Not so easy in Germany
- Don’t be afraid of Clients with Foreign Assets!
- Can foreign Taxes be set off against UK Inheritance Tax?
The law firm Graf & Partners and its German-English litigation department 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.