GERMANY Law and Practice Contributed by: Christian von Oertzen and Philipp Windeknecht, Flick Gocke Schaumburg
in the amount of 50% of their potential heirship share, according to the rules of intestate succession. The basis of the calculation is the estate at the time of death. A so-called supplementary statutory share may also apply, since the testator will not be able to avoid forced heirship rights by minimising their estate through donations to third parties within a period of ten years before their death. For calculating the supplementary statutory share, the value of the decedent’s estate will be increased by the value of such donations. The donations will be fully taken into account within the first year prior to the decedent’s death, and will be taken into account by one tenth less for each further year prior to the decedent’s death. 2.4 Marital Property The German statutory matrimonial property regime is the regime of accrued gains if the spouses have not entered into a marital contract. The spouses are allowed to modify their statutory matrimonial property regime, or choose the regime of community property, or the regime of separation of property. However, the matrimonial property regime can only be modified or chosen by marital contract. If the matrimonial regime of accrued gains applies, each spouse’s assets remain the property of the respective spouse regardless of whether they were acquired before or during the marriage. In the case of divorce or the death of one of the spouses, or if the matrimonial regime is changed to the separation of property, the spouses must equalise their accrued gains made during the marriage. For the calculation of accrued gains, the period between the day of mar - riage and the day the matrimonial regime ends is deci - sive. According to that, the amount to be paid due to the equalisation has to be determined by comparing the initial assets (ie, the assets at the time the spouses entered into the marriage) with the final assets of each spouse (especially on the day the divorce petition was delivered to the respondent). Gratuitous transfers from a spouse to a third party will be taken into account for the calculation, unless they were performed more than ten years ago or were per - formed with the other spouse’s consent. Otherwise,
such transfers will be added to the initial assets of the respective spouse. 2.5 Transfer of Property In general, there are no differences between assets transferred during lifetime or at death. For income tax purposes, assets are also held with their updated historical acquisition costs after the transfer. Donees/ heirs carry forward these historical costs, instead of the donor/decedent. The transfer itself usually does not trigger capital gains tax or exit taxes; therefore, no step-up occurs. 2.6 Transfer of Assets: Vehicle and Planning Mechanisms The gift and inheritance tax-free allowances listed under Section 16 of the IGTA are available every ten years. If estate planning is started at an early stage of the donor’s/testator’s life, these tax-free allowances can be utilised multiple times as donations are made over several decades. If the donor decides to donate profitable assets such as shares or rented real estate, they can make a gift while retaining a usufruct right. However, this usufruct right is taken into consideration when determining the value of the transfer of assets. Family limited partnerships are used as tax-planning mechanisms, making the children of the donor/testa - tor limited partners in this structure. The main ben - efit of such a structure is that the donor/testator can divide controlling rights to ease their children into the responsibilities of wealth management and limit their initial involvement in the operations of the structure, while at the same time retaining a large degree of con - trol over the partnership structure. As limited partners, the children of the donor/testator have no ability to control, direct or otherwise influence the operations of the partnership structure. Prenuptial and postnuptial agreements can also be a tax-efficient tool for transfers between spouses. 2.7 Transfer of Assets: Digital Assets The digital estate is an interplay of inheritance law, fundamental rights, privacy and business practices of service providers. In Germany, there are only a few judicial verdicts in relation to the digital estate, so many legal issues are still unclear and somewhat
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