Allowances for inheritance tax: Recommendation for early transfer of assets

Allowances for inheritance tax: Recommendation for early transfer of assets

According to a report by www.focus.de, real estate has become so expensive that many assets already exceed the inheritance tax allowance. For this reason, experts advise parents and grandparents to transfer assets during their lifetime in order to take advantage of the same allowances as with inheritance tax, and to do so again every ten years. However, recipients must note that the social welfare agency can reverse donations during the first ten years if the donor becomes needy. However, recipients are not allowed to become impoverished themselves and there are various conditions under which repayment is excluded.

What significance do the donor's maintenance claims have?

The donor must first assert his maintenance rights, and the maintenance obligation of the recipient depends on their income and family relationship. The social welfare agency must prove that the donor is in need and has no other assets before a repayment is made. Refunding is excluded if the recipient cannot return the gift without endangering their own livelihood.

Recipients must not become impoverished themselves

If the recipient cannot return the gift without jeopardizing his or her own livelihood or if the gift is no longer available, reclaim can be excluded. In addition, the scope of the gift repayment claim can be reduced if the donee has agreed in the contract to give the donor some rooms to live in or to provide care services.

Current developments on the real estate market show that the problem of gift tax and its impact on social welfare providers play an important role for owners and recipients of real estate. It is crucial that asset transfers are carefully planned to avoid unexpected consequences.