What role does the will play in gift tax?
February 22, 2022 | 45,00 EUR | answered by Bernd Schreiber
Dear tax advisor,
I am Lucas Werner and I have a question regarding gift tax. In my family, a larger gift is being planned, which also involves a will. I am unsure about the potential implications of the will on gift tax and what I should pay particular attention to.
The situation is as follows: My parents want to gift me a property that they inherited themselves. In their will, they have stated that I am the sole heir and that the property should automatically pass to me upon their death. Now, they want to gift me the property during their lifetime in order to save on taxes and to ensure that I actually receive the house.
My concerns are that the will could affect the gift tax and that I may end up paying more taxes than originally planned. I would like to know whether the will has any impact on gift tax and whether it would be advisable to adjust the will to avoid any tax disadvantages.
Therefore, my question to you is: What role does the will play in gift tax and what measures can we take to take advantage of tax benefits and avoid potential drawbacks? I look forward to your expertise and thank you in advance for your support.
Kind regards,
Lucas Werner
Dear Mr. Werner,
Thank you for your question regarding gift tax in connection with a will. It is good that you are seeking information and advice in advance to understand and minimize possible tax implications. I am happy to provide you with a detailed answer to your question.
In your case, where your parents wish to gift you a property that they have inherited and have specified in their will that you are the sole heir, both the will and gift tax play an important role.
First and foremost, it is important to know that gifts are generally taxable. In Germany, there is a tax-free allowance of 400,000 euros for children, including you as their son. Furthermore, different tax rates apply depending on the relationship and amount of the gift. For gifts from parents to children, the tax rate ranges from 7% to 30%, depending on the amount of the gift.
The will of your parents, appointing you as the sole heir, can affect gift tax as it already establishes a clear distribution of the inheritance after their passing. In your case, however, your parents wish to gift you the property during their lifetime, which is generally possible.
To take advantage of tax benefits and avoid possible drawbacks, you may consider adjusting the will or potentially appointing a so-called pre or post heir. A pre or post heir only inherits the estate after the parents' passing, which can offer tax advantages. It is important, however, to seek advice from an experienced lawyer specializing in inheritance law.
In summary, the will of your parents may impact gift tax, but there are ways to utilize tax benefits and avoid disadvantages. I recommend consulting with a specialist in inheritance law to discuss your individual situation and find the best possible solution.
I hope my answer has been helpful, and I am available for further questions.
Best regards,
Bernd Schreiber
