You have built wealth for decades. But what happens to it after you? Without planning, up to 50% of your wealth can go to the state — through inheritance tax. With the right strategy, more stays with your family.

Inheritance Tax in Germany

Tax-Free Allowances

Spouse: 500,000 euros tax-free
Children: 400,000 euros per child tax-free
Grandchildren: 200,000 euros tax-free
Siblings/Nephews/Nieces: 20,000 euros tax-free

Allowances apply per heir, per inheritance event. A couple with 2 children has effectively 1,300,000 euros in allowances.

Strategies for Minimizing Inheritance Tax

1. Lifetime Gifts

The most important strategy: Allowances renew every 10 years. If you gift your child 400,000 euros every 10 years, 1.2 million euros can be transferred tax-free over 30 years.

2. Start Early

The earlier you begin wealth transfer, the more 10-year cycles you can use. Start at 40, not at 70.

3. Usufruct (Niesbrauch)

Transfer the property to your child but retain the right of use. The value of usufruct reduces the taxable gift value.

4. Family Foundation

For larger wealth (1M+): A family foundation can preserve wealth across generations and reduce tax burden. Complex but effective.

5. Life Insurance

A term life insurance can finance the inheritance tax payment without liquidating assets.

Will: Not Optional

Without a will, statutory succession applies — which may not match your wishes. A notarized will costs 150-500 euros and can save hundreds of thousands in disputes and taxes.

Depot Inheritance: Specifics

Stocks and ETFs are valued at date of death — accumulated gains are tax-free for the heir (no sale)
Depot transfer: The depot can be transferred directly to the heir (no sale needed)
Loss carryforwards: Do NOT pass to the heir — they expire

The Checklist

Create a will (notarized or handwritten)
Establish a gift plan with 10-year cycles
Know and utilize tax-free allowances
Set up account power of attorney and healthcare proxy
Manage digital estate (broker access, crypto wallets)

Bottom Line: Estate planning is not a topic for old people — it is a topic for everyone building wealth. The earlier you plan, the more stays with your family. And the less goes to the tax office.