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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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MONEY

Why German bank customers could soon pay less for their account

A major German bank is set to scrap fees on large balances - and a number of others look set to follow. Here's why people in Germany may be paying less for their savings or current account in the near future.

Why German bank customers could soon pay less for their account

What’s going on? 

Interest rates have been at rock-bottom levels for years, making it much harder for people to get returns on their savings.

In recent years, many banks have even been levying what’s known as negative interest rates on customers. If interest normally incentivises people to save by helping them to grow their money, negative interest basically does the opposite.

If you have a certain amount of money in the bank, your bank will charge you negative interest via a deposit holding fee, which will usually be a certain percentage of your balance.

With N26, for example, balances of over €50,000 are subject to a 0.5 percent fee each year. For a balance of exactly €50,000, that equates to €250 in bank charges just for keeping your money there. 

Some banks even charge a deposit holding fee for balances as low as €5,000 or €10,000 in a current account. 

On Tuesday, ING Deutschland became the first bank to announce that it would be scrapping negative interest rates for the vast majority of its customers.

From July 1st, new customers of ING will be able to deposit up to €500,000 in their account without being charged for it, while existing customers will automatically have the fee-free amount raised to €500,000 from the current €50,000. 

Now, it seems a number of other German banks are planning similar moves. 

Why is ING Deutschland ending the holding fee?

Not entirely out of the goodness of its own heart – though that doesn’t stop it being good news for customers.

The European Central Bank (ECB) is set to make a decision on interest rates in the bloc this July, and most people expect that the bank is poised to increase interest rates from minus 0.5 percent to zero. 

Since banks have basically been passing on the ECB’s fees to their own customers, a hike in the ECB’s interest rate would spell the end of most negative interest-rate accounts in any case. But ING Deutschland said it wanted to pass on the positive interest rate trend to its customers even earlier.

READ ALSO: EXPLAINED: How to save money on your taxes in Germany

“With the increase in the fee-free allowance for credit balances on the current and extra accounts, the deposit fee is no longer applicable for 99.9 percent of our customers,” said Nick Jue, chief executive officer of ING in Germany. “We were one of the last banks to introduce a deposit holding fee and one of the first to virtually abolish it.”

He added that the bank had already kept its promise to abolish the holding fee for almost all customers before the European Central Bank made its decision.

Does this have anything to do with that court decision on bank charges?

That’s definitely a factor. According to a decision in Germany’s Federal Supreme Court last year, credit institutions have to obtain the consent of their customers when making changes to their fees and conditions.

That means that financial institutions have to ask for consent to current fees retrospectively if they don’t want hoards of people trying to claim their money back.

If a customer doesn’t consent to the fees, the bank will usually close that customer’s account.

Man signs a contract

A man in a suit fills in an official form. Photo: picture alliance/dpa/Pixabay | hnw-Gruppe

According to ING Deutschland, the scrapping of negative interest rates on balances up to €500,000 may help to sway those customers who have not yet agreed to the latest terms and conditions – including the deposit holding fee.

Anyone who agrees to the Ts&Cs will automatically be given the higher allowance as of July 1st.

“ING Deutschland expects that the increase in the allowances will convince in particular those customers who have not yet agreed to the General Terms and Conditions including the holding fee, and that the bank will thus terminate fewer customers than last planned,” ING said in a press release. 

READ ALSO:

What other banks are planning to do this?

According to reports in Bild and Bialo, the other banks planning on ending negative interest rates (or raising the threshold for fee-free balances like ING Deutschland has done) include:

  • Deutsche Bank
  • Commerzbank
  • Deutsche Apotheker- und Ärztebank (Apobank)
  • Dortmunder Volksbank
  • Hamburger Sparkasse (Haspa
  • Frankfurter Sparkasse
  • Frankfurter Volksbank
  • Mittelbrandenburgische Sparkasse
  • Nassauische Sparkasse (Naspa)
  • Ostsächsische Sparkasse Dresden
  • Sparda-Bank München
  • Sparda-Bank Südwest
  • Sparda-Bank West
  • Sparkasse Hannover
  • Sparkasse Pforzheim Calw
  • Volksbank Stuttgart

What does this mean for my savings?

There’s good news and bad news.

The good news is that, from July, you’ll no longer have to pay exorbitant charges just to store your money in a safe place – and you won’t be penalised for saving more. The bad news, on the other hand, is that low interest rates aren’t going away anytime soon.

So while you won’t be losing money hand over fist, you won’t be earning much of a return on your savings either.

Banks in Frankfurt

Skyscrapers in the financial district of Frankfurt am Main. Photo: picture alliance/dpa/dpa-Zentralbild | Fernando Gutierrez-Juarez

“If the interest rate environment continues to develop positively, we will also let our customers participate in this development,” said ING Deutschland’s Nick Jue. “However, the low-interest phase will continue for the time being and broadly diversified investments will remain important.”

Getting a securities account where your money is invested is one way to try and grow your savings, as is investing in property.

Of course, people with mortgages and other loans benefit from the low interest rates – which could be why the German property market is currently booming. 

READ ALSO: Five ways Germany’s soaring inflation could affect your life

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