Inheritances and gifts are subject to taxation under the Inheritance and Gift Tax Act (ErbStG). However, the relevant rules also include transactions comparable to an inheritance or donation. Legacies, for example, are also subject to inheritance tax. Corresponding design possibilities, which apply, for example, to the transfer of operating assets, also exist here!
Principle 1: What is a Legacy?
In the case of transfers of property occurring as a result of the death of a natural person, a distinction is made between inheritances and legacies. While the inheritance covers the entire estate of the decedent, the legacy only causes the transfer of the previously defined assets. This can be done by will or inheritance contract (§§ 1939, 1941 BGB). The legatee shall accordingly not enter into the legal succession of the deceased.
Example: Mother M uses her children as sole heirs in her will. Her best friend, a third party under civil and tax law, is to receive two vehicles of the deceased. He therefore receives a legacy. If the succession occurs, the children first inherit the entire property of the M. They are then obliged to give the vehicles contained in this property to the legatee, the best friend of the deceased mother.
The legatee’s claim to restitution exists under § 2147 BGB. He is to be asserted directly against the heirs.
Legacies are also to be distinguished from so-called requirements according to § 1940 BGB. For example, the decedent may determine that the heiress or heir receives the “single-family home” asset only if he or she also assumes the necessary maintenance. The executioner of the will is responsible for monitoring the condition.
A legacy is subject to inheritance tax. It is equivalent to the acquisition of death, i.e. the “classical” fall of inheritance (§ 3 paragraph 1 number 1 Alternative 2 ErbStG). Upon issuance, they reduce the taxable acquisition of the actual heir (§ 10 (5) no. 2 ErbStG).
2nd Legacy – Inheritance Tax on Acquisition of Death
Although legacies are subject to inheritance tax, certain regulations differing from classical estates apply to them. These include in particular:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.