Real estate market / real estate news: Whether emigrant families, entrepreneurs and employees who spend a lot of time abroad or the retiree with his vacation property in Mallorca – when it comes to inheritance, the requirements of the EU Inheritance Regulation must be observed. Because if one lives outside Germany in Europe for a longer period of time, the inheritance law of the respective country applies in the event of death. And this often deviates very strongly from German law.
This can have serious consequences for the testator's entire estate, because foreign countries have different inheritance law regulations that differ substantially from German inheritance law u.a. be able to distinguish between legal succession, compulsory portion claims, gifts or usufruct rules. To counteract this, it is advisable to seek the advice of an independent estate planner at an early stage, such as the Certified Foundation and Estate Planners (CFEP® certificate holders) certified by the FPSB Germany, and to document the issue of choice of law in the will. They can help with holistic estate and wealth planning.
EU Inheritance Regulation
It was actually so well planned by pensioner Dieter Feldhoff: The own Finca on Majorca and the majority of the financial assets should go after his death completely to wife Inge. But this did not happen. The reason was the EU inheritance law regulation, which has been in force since 2015. What Feldhoff had not considered: Because he and his wife had often escaped the bad weather in Germany after retirement and lived more on the sunny island than in their original home of Cologne, Spanish inheritance law applied after Feldhoff's death.
The consequence: Because Spanish law provides for a significantly higher claim to a compulsory portion by relatives and the appointment of the spouse as sole heir (according to the Berlin will) failed under Spanish law, the widow Inge now has to fight with the children over the assets, including the beloved vacation property. For Prof. Tilmes is not an isolated case: "Many inheritance cases involving foreign countries will have to be judged considerably differently from the testator's original plans under the new legal situation."
New legal situation as of 2015
Before 2015, the question of law in international inheritance cases was answered in Germany according to the nationality principle. It was thus indifferent whether Germans lived in their homeland or abroad – always the German right applied. This has changed: It is now no longer relevant what nationality the testator had. "It is rather the last habitual residence that is decisive," explains Prof. Tilmes.
If, in the event of death, foreign inheritance law is suddenly applied instead of the original plan, this can sometimes lead to unpleasant surprises for the relatives. For example, the right to a compulsory portion, which applies under German inheritance law, is unknown to some other inheritance laws. Also the participation of the spouse in the inheritance can be regulated differently or not at all.
Estate planners provide clarity
"From our consulting practice, we know how important it is to call on the consulting services of an independent estate planner in good time," says FPSB board member Tilmes, who, in addition to his board activities, is also Scientific Director of the PFI Private Finance Institute / EBS Finanzakademie of the EBS Business School, Oestrich-Winkel. "Because the EU Inheritance Regulation potentially affects anyone who spends an extended period of time in a country of which they are not a national," explains Tilmes.
"Anyone who does not want an unknown and possibly disadvantageous inheritance law to apply to their estate should deal with their own estate succession planning at an early stage," therefore recommends Prof. Tilmes. "Because it's not just about legally secure arrangements, for which a lawyer should be consulted, but first it's about the financial and economic goals and wishes that should be taken into account in succession planning."With regard to the EU inheritance regulation, a will can stipulate that German inheritance law is to be applied as a matter of principle. This right of choice is explicitly provided for by the regulation. In many cases, uncertainty can thus be eliminated by a choice of law in the will. Those with multiple citizenships can choose the law of one of these states. Nevertheless, each circumstance relating to other bilateral treaties should be reviewed individually.