Modify prenuptial agreement
June 1, 2015 | 50,00 EUR | answered by Tobias Heinrich
Subject: Possible inheritance tax
Please advise me: Is the "Solution Idea 2" in the "Details" a solution or not? What is your advice then?
Details:
Condition:
1. Marriage contract 1990: Separate property
2. Will: Berlin Will
3. House and land ownership legally registered to wife as sole owner
4. Agreement of the spouses regarding the rental income from this house and land of the wife/rental contracts on both spouses: Joint usufruct of the spouses. The income from renting and leasing is freely allocated by the spouses in the tax return. This has been recognized by the tax office for years in accordance with a decision of the BFG.
Problem:
Scenario 1: Husband (70) dies first: Everything as desired, no inheritance tax problems (or only minor ones - due to exemptions): Nothing to change, spouse happy except for grieving but secured widow.
Scenario 2: Wife (49) dies first: Severe implications regarding inheritance tax for the grieving widower. Husband pays hefty inheritance tax because "nothing belongs to him" so far. (Possibly testamentary distribution to husband and children: Seriously damages their eligibility for student financial aid, because the income (income statement) is not there - but the wealth is.
Solution ideas?
1. Transfer ownership to both: Would be very expensive, as there are 4 developed, expensive, mortgaged properties, but would solve the problem satisfactorily. (Would probably still be cheaper than the inheritance tax.)
or
2. Write a new marriage contract (community of gains), stating clearly, tax and legally binding, that both spouses have jointly acquired and used the properties registered to the wife in the sense of community of gains, and therefore the Berlin Will only bequeaths 50% to the widower, because he "already owns" half.
Dear inquirer,
In the context of an initial consultation and your payment of fees, while following the regulations of this forum, I would like to answer your question.
First and foremost, I want to clarify that I am only allowed, able, and willing to advise on tax matters. If statements regarding civil law issues are made, I recommend having them reviewed by a lawyer.
Your solution idea 1: Please note that gifts (i.e. generous donations made during one's lifetime, such as transferring half of the properties to the husband in this case) have similar or identical consequences to inheritance (acquisition mortis causa). In particular, gifts are generally considered as advances. This means that this "solution" prevents the problem from growing due to further increases in value. However, nothing else is gained.
Your solution idea 2: If the marriage contract is to be adjusted retroactively, you must first seek legal advice to determine if a "clarification" is possible. If the marriage contract is only to be changed "from now on," a claim for marital gain arises only from the marital gain generated from now on.
Note: Regarding the situation of the children (potential compulsory portion claim, etc.), a specialist lawyer should be consulted in any case.
My advice: A tax advisor can assist you, in collaboration with a family law attorney. In my opinion, it is essential to assess the complete tax and civil law situation of the individuals involved and, together with the parties, determine what the personal objectives are. Once these are established, a plan can be developed to achieve the desired outcome in the most optimal way.
I hope I have answered your questions satisfactorily, but I strongly recommend a detailed consultation with the above-mentioned professionals. I am happy to assist you along with a specialist in family law.
Best regards,
Tobias Heinrich
