GERMANY Law and Practice Contributed by: Tanja Schienke-Ohletz, Flick Gocke Schaumburg
made with the approval of the foundation supervisory authority. However, a family foundation can be interesting if cer- tain assets are to be preserved. The heirs then no longer become owners, but merely beneficiaries of the foundation (as with a trust). This can also offer protec- tion from the fragmentation of family wealth. Charitable Foundation Charitable foundations, on the other hand, must exclu- sively promote charitable causes. There are numerous tax breaks for this. The foundation itself is tax-exempt, as are transfers to the foundations. Donations are also tax-deductible. However, the assets cannot be returned to private use without tax disadvantages. 6.2 Tax and Regulatory Constraints In principle, the foregoing rules are not only aimed at tax optimisation: these are economically sensible arrangements that do not constitute tax avoidance. German tax law contains a general anti-abuse pro- vision. This provision prohibits the abuse of legal structuring options in tax law. Tax law cannot be cir- cumvented by abusing legal structuring options. This means that, in the event of abuse, the tax assessment will be based on the most economically appropriate structure rather than the chosen structure. Abuse occurs when an inappropriate legal arrange- ment is chosen that, compared to an appropriate arrangement, leads to a tax advantage for the tax- payer or a third party that is not provided for by law.
The heir enters into a contractual relationship with the service provider and thus obtains material access to the data stored under the deceased’s account. In practical terms, this means that heirs are granted access to and the right to view the digital assets, as the deceased had previously – without, however, assuming the deceased’s identity or actively continu- ing to use the account. The heirs can assert claims for information against service providers in order to gain access. A separation between highly personal and property-related content is neither practicable nor legally required. Succession in crypto-assets is handled in the same way: upon the death of the testator, all property rights, including crypto-assets, are transferred to the heirs. The relevant object of reference in inheritance law is the private key, as this is the only way to access the crypto-assets. The heirs become the legal owners of the stored data (eg, private key on hardware, software or a paper wallet) and assume the legal position of the deceased. The special feature of crypto-assets is that the tokens themselves are not stored on the storage medium, but are recorded as entries on the blockchain; the private key is the prerequisite for accessing and disposing of the crypto-assets. If this can no longer be found, the heirs are indeed no longer able to dispose of the assets. This must then be secured by means of a will. 7.2 Planning Considerations Special Challenges and Recommendations These include the following. • Access data: For crypto-assets, access to the private key is essential; without it, the assets are effectively lost, even if they are legally transferred to the heirs. It is therefore advisable to securely document access data (private keys, passwords, seed phrases) and store it in such a way that the authorised persons can access it in the event of inheritance. • Execution of wills and powers of attorney: Order- ing the execution of a will (possibly limited to the digital estate) or granting a power of attorney (with
7. Succession of Digital Assets 7.1 Legal Framework
Succession to digital assets is generally governed by the general rules of universal succession: upon the death of the testator, all property rights, including digi- tal assets such as online accounts, email accounts, social media profiles, stored data and contractual rela- tionships with internet providers, pass to the heirs.
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