What tax-free allowances apply to inheritance tax?
May 11, 2023 | 40,00 EUR | answered by Ella König
Dear tax advisor,
My name is Hildegard Evers and I am facing the difficult situation of inheriting an estate. My great aunt has passed away and left me an inheritance. Now I am wondering what tax exemptions apply to inheritance tax and if I can comply with them.
Currently, I have not yet taken on my great aunt's inheritance, as I first want to get an overview of the tax aspects. Unfortunately, I lack the necessary expertise in the area of inheritance tax and I am worried that I may have to pay high taxes that I may not be able to afford.
Therefore, I request information on the current tax exemptions for inheritance tax. What are these exemptions and how can I ensure that I comply with them? Are there ways to reduce or even avoid the tax burden? What specific steps should I take as the heir to optimally structure the inheritance tax?
Thank you in advance for your support and I look forward to your competent advice on this matter.
Sincerely,
Hildegard Evers
Dear Mrs. Evers,
Thank you for your inquiry regarding inheritance tax. It is understandable that you would like to inform yourself about the tax aspects before accepting the inheritance in order to avoid unpleasant surprises. I am happy to provide you with detailed information about the tax-free allowances for inheritance tax and show you ways in which you can optimize the tax burden.
Firstly, I would like to mention the current tax-free allowances for inheritance tax. The allowance for spouses and registered partners is 500,000 euros. For children and stepchildren, the allowance is 400,000 euros, for grandchildren it is 200,000 euros, and for parents and grandparents it is 100,000 euros. Siblings have an allowance of 20,000 euros, and all other persons, such as nieces and nephews, have an allowance of 20,000 euros.
To ensure that you comply with the tax-free allowances, it is important to correctly determine the value of the inheritance. This involves taking into account all assets and debts of the deceased. If the value of the inheritance exceeds the tax-free allowances, inheritance tax must be paid. However, in this case, you can consider various tax planning options to reduce the tax burden.
One way to reduce the tax burden is to make use of allowances within the family. For example, children can divide their allowances among themselves to minimize the tax burden. Additionally, by planning for lifetime gifts in advance, you can reduce the inheritance tax. It is important to note, however, that certain gifts made within 10 years before the inheritance will be taken into account.
As the heir, you should also gather and review all relevant documents to avoid any errors in the valuation. I also recommend that you consult a tax advisor early on to receive personalized tax advice and optimize the inheritance.
I hope this information has been helpful to you and I am available for any further questions you may have. Thank you for your trust, and I wish you success in handling the inheritance.
Sincerely,
Ella König
