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MONEY

Everything you need to know about German inheritance law

If you're planning on living in Germany for a while, you may have considered making a will. But if you don't, your estate could be subject to German inheritance law. Here's what you need to know.

Will
A man writes his will. Photo: picture alliance/dpa/dpa-tmn | Christin Klose

What happens if I don’t make a German will?

Under the EU Succession Regulation, that largely depends on where you have your primary residence and your original nationality. 

If you’re not a German citizen but nonetheless live in the country, German law will automatically apply after your death. Germany also recognises foreign wills, so if you have already written one in your home country then this can be used to determine who will inherit your assets and estate. However, since German law will be applicable and German courts will ultimately make decisions on the execution of your will, clauses that contradict German law (i.e. if you try to disinherit your heirs) will be invalid. 

Under EU law, you do have the right to specify whether you would like the laws of the country you reside in (Germany) or those of your home country to apply, though it will be up to your successors to enact this wish via what’s known as a ‘choice of court’ agreement. 

If you are a German citizen who is resident in Germany and die without leaving a will, then German inheritance laws will automatically apply. 

Things get a lot more complicated the second you introduce multiple passports and residences, however, since it may not be clear which law applies. In some particularly difficult cases, one co-heir may argue that Germany was the main residence and receive the appropriate Certificate of Inheritance according to German law. Then, a further co-heir will argue the case for another place of residence, meaning the first Certificate of Inheritance has to be discarded. 

READ ALSO: When will Germany relax its dual citizenship laws?

For these reasons, it can be incredibly worthwhile for foreigners to at least make a record of which law they would like to apply after their passing, even if they don’t make a will. Here’s what to expect from German law. 

German inheritance law: the basics 

If a German citizen passes away without making a will, the concept of statutory succession will apply. This fancy-sounding legal term essentially just means that your estate will be passed to your immediate relatives.

For the purposes of prioritising these relatives, they are split into three groups:

  • The first group is comprised of your ‘direct heirs’, which means either your children or, if your children have passed away, to your grandchildren
  • The second group of family members includes your parents, siblings and nieces and nephews 
  • The third group includes aunts, uncles, cousins and more distant relatives 

Essentially, if possible, your estate and any debts will automatically be passed onto the first group (children or grandchildren) under German law. If not, your parents will be the next in line, and if they have also passed away, your siblings and nephews the next in line, and the third group of relatives will be last in line. In other words, your aunts and uncles will only inherit under German inheritance law if there are no other surviving relatives. 

You may have noticed one key person missing in all of this: your spouse. 

If you are married, your spouse will automatically inherit:

  • 25 percent if there are surviving relatives in the first group (i.e. children and grandchildren) 
  • 50 percent if there are surviving relatives in the second group (i.e. parents, siblings, nieces and nephews) 
  • 100 percent if there are no surviving relatives 

If you’re divorced at the time of your death, however, your ex-spouse won’t be eligible to inherit anything. 

READ ALSO: Avoid getting tripped up by German family law

What rights and responsibilities do my heirs have? 

If there’s what’s known as a ‘community of heirs’ – meaning a group of people, such as two or more children – they will be required to make decisions on the distribution of property and assets as a group. 

Books and CDs

CDs and children’s books lie in a pile. Photo: picture alliance/dpa | Christian Charisius

Under § 2038 German Civil Code – BGB, they will therefore have the responsibility to assist in administering the estate, keeping co-heirs informed about what they have inherited and dealing with outstanding debts that may have been left behind. They also, however, have several important rights, such as the right to reject the inheritance (for instance, if the debts outstrip the assets), the right to benefit from the sale of the inheritance, and the right to request the partition of the inheritance. 

Immediate heirs also have certain claims on your assets that prevent them from being written out of a will entirely, but we’ll cover this in a later article on putting together your will. 

How is my estate valued?

The value of your estate is valued according to fair market value (FMV) at the time of your death. 

Is it worth making a will?

Making a will is, of course, an entirely personal decision, but if you foresee any issues with the distribution of the estate under German inheritance law, it could be worth speaking to an attorney or putting together a will yourself. 

Useful vocabulary

Legacy – (das) Erbe

Heirs – (die) Erben 

Inheritance law – (das) Erbrecht

Will – (das) Testament 

Testator – (der) Erblasser

Succession – (die) Erbfolge 

Community of successors – (die) Erbengemeinschaft

Keep a look for articles by The Local Germany in the coming weeks that will delve deeper into how to make a will in Germany, either with or without the help of an attorney or notary.

Member comments

  1. My husband has 5 children and 4 grandchildren from his first marriage and we are both UK citizens.

    So if I understand the above correctly, if he passed away (God forbid), only 25% of the apartment which we jointly own here in Munich would be mine?! And the remaining 75% split between his 5 children?

    WTF! This cannot be, surely.

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ENERGY

Why did Germany make a U-turn on gas levy – and what do the new plans mean?

It's been an extraordinary week in German politics after the government announced a U-turn on the gas levy, and plans for a new gas price cap. Here's what we know so far.

Why did Germany make a U-turn on gas levy - and what do the new plans mean?

What happened to the gas levy?

There had been lots of talk about getting rid of it, but on Thursday it became official: the German government announced it was ditching the gas levy – or Umlage – that was meant to come into force on Saturday October 1st. 

This surcharge would have seen gas consumers in Germany take on some of the soaring costs that suppliers are facing as they try to replace Russian gas. It was to be used to prop up struggling importers such as Uniper, Sefe and VNG.

The gas levy would have resulted in 2.4 cents per kilowatt hour being added to gas bills, which would be an extra burden of several hundred euros per household, although VAT on gas consumption was to be reduced at the same time.

It was due to come into force on Saturday October 1st – but the levy had come under fire in recent weeks because of the burden it would add to households during the cost-of-living crisis as well as concerns about energy firms taking advantage of it. It was also unclear if it was constitutional after it was announced gas firm Uniper was being taken under state control. 

The gas levy was put together when there was a real fear that Germany could imminently run out of gas, the government said. Economics and Climate Minister Robert Habeck maintained that it was the right instrument at the time but that it is “no longer needed”.

Instead of the gas levy, tailored measures are to be developed for troubled gas suppliers. 

So the German government has made a significant U-turn on its policy – it’s pumping a package worth €200 billion into providing energy price caps that will aim to shield homes and businesses across Germany from sky-high bills. 

READ ALSO: Germany to spend €200 billion to cap soaring energy costs

Germany, which has been highly dependent on imports of fossil fuels from Russia, has been desperately trying to find other energy sources as supplies have been cut.

Economics and Climate Minister Robert Habeck (Greens), Chancellor Olaf Scholz (SPD,) and Finance Minister Christian Lindner (FDP), present the German government's plans for energy supply and price caps for gas.

Economics and Climate Minister Robert Habeck (Greens), Chancellor Olaf Scholz (SPD,) and Finance Minister Christian Lindner (FDP), present the German government’s plans for energy supply and price caps for gas. Photo: picture alliance/dpa | Kay Nietfeld

Wait – so there is more support for people?

Yes. The German government is throwing its weight behind a different strategy. It will provide a temporary cap on electricity and gas prices to help protect residents from being hit with massive bills. 

On Thursday, Chancellor Olaf Scholz, speaking via video link, said: “The German government will do everything so that prices sink.”

Scholz said that the price hikes on the energy market were a consequence of Russia’s actions, which used “its energy supplies as a weapon”.

“We find ourselves in an energy war over prosperity and freedom,” Finance Minister Christian Lindner added during the press conference.

Lindner said that protecting consumers against rising bills was a “crystal clear answer” to show Russian President Vladimir Putin that Germany is “strong economically”.

However, it’s still unclear what exactly the gas price cap – or Gaspreisbremse – will look like in practical terms. A commission of experts is to draw up a proposal by mid-October. The aim is to see costs capped for a basic quota of gas. 

READ ALSO: How might a gas price cap in Germany work?

And it won’t just affect gas prices – electricity costs will also be capped.

The profits of power plants that are operated without gas but are raking in high additional profits due to rising energy prices are to be skimmed off.

These revenues are to be used to subsidise the electricity consumption of consumers and small and medium-sized enterprises to a certain extent – here, too, the talk is of ‘basic consumption’ being covered. 

READ ALSO: KEY POINTS – Everything Germany is doing to relieve rising energy costs

What about the VAT reduction?

As we mentioned above, the VAT cut on gas was due to come into force along with the gas levy to ease the pressure on households. 

On Thursday, Habeck said the VAT cut on gas consumption, from the usual 19 percent down to seven percent – will remain in place even though the gas levy is being dumped. 

People walk near the North Sea in Westerland, Sylt on September 28th. Temperatures have dropped in Germany.

People walk near the North Sea in Westerland, Sylt on September 28th. Temperatures have dropped in Germany. Photo: picture alliance/dpa | Frank Molter

How is this all being funded?

That was a major contentious point, but the coalition of the Social Democrats (SPD), Greens and Free Democrats (FDP) seem to have come to an agreement.

The government wants to borrow up to €200 billion for the economic stabilisation fund. This fund, which was initially set up in 2020 to help pump cash into pandemic support for people and businesses in Germany, can only be sued for specific measures. That means it doesn’t count as being part of the annual budget for the federal government, keeping Finance Minister Christian Lindner happy. 

So will energy prices actually come down?

Energy prices are still expected to go up but a price cap should help stop them from spiralling too much.

But Economics and Climate Minister Habeck has been trying to dampen expectations of the gas price brake. The Green politician said it wouldn’t be possible to use the cap to subsidise the gas price down as far as it had been in 2021. “And not for a very long time,” he told Deutschland-Funk on Friday.

“Gas and energy as a whole will cost the German economy more than it did in the very affordable years,” he added.

Habeck said it wouldn’t be possible to avoid every price rise. “Some burden will be taken (through the price cap), but the complete burden will certainly not be able to be carried,” Habeck said. “Not even with this gigantic €200 billion.”

Habeck also warned against believing that a gas price cap means people will be able freely use more energy this winter. He said consumers – whether private households or firms – still had to cut down on gas as much as possible to avoid a shortage this winter. 

On Thursday, Federal Network Agency boss Klaus Müller urged German residents to avoid pumping up their heating too early due to the precarious situation. 

“Without significant reductions, including in private households, it will be difficult to avoid a gas shortage this winter,” he said.

READ ALSO: German residents urged to save more gas despite cold weather

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