What options are there to minimize my inheritance tax?
September 17, 2022 | 40,00 EUR | answered by Dietrich Hohenadel
Dear tax consultant,
My name is Wolfgang Köhler and I am facing a complex tax situation that is weighing heavily on my mind. A few weeks ago, my father passed away and left me a significant inheritance. I am concerned about the financial burdens that may come from the inheritance tax that will be imposed on the inherited assets.
In addition to a substantial sum of money, my father also left me properties and valuable assets. As I do not have extensive knowledge of tax matters, I am uncertain about the options I have in regards to inheritance tax. I am aware that there are various ways to minimize or optimize the tax burden, but I lack the expertise to effectively implement them.
First and foremost, I want to ensure that I make use of all legal options for tax optimization and avoid unnecessary tax payments. Therefore, it would be very helpful for me if you could provide me with specific recommendations and tax saving opportunities. What strategies can be used to minimize my inheritance tax and protect my inherited assets to the best extent possible?
I thank you in advance for your support and expertise in resolving this important issue.
Sincerely,
Wolfgang Köhler
Dear Mr. Köhler,
First of all, I would like to offer my sincere condolences on the loss of your father. It is understandable that you are concerned about the financial burdens in this complex tax situation. Inheritance tax can indeed be a significant financial burden, especially when it comes to larger assets.
It is important to know that inheritance tax in Germany varies depending on the degree of relationship between the deceased and the heirs. Different tax-free allowances and tax rates apply. For example, the tax-free allowance for children is €400,000, with a tax rate of 15-43% on the inherited assets above that amount.
To minimize the tax burden and protect your inherited assets to the best of your ability, there are various strategies and options you can consider. One option is to use tax-free allowances and tax benefits to reduce the inheritance tax. This can be done, for example, through skillful estate planning or the establishment of tax-optimized inheritance contracts.
Furthermore, there are options to take advantage of certain tax benefits such as the exemption of business assets or the use of tax exemptions for specific assets. Setting up foundations or transferring assets during your lifetime can also bring tax benefits.
However, it is important to note that the tax optimization of the inheritance should be tailored to your individual situation. Therefore, I strongly recommend that you contact an experienced tax advisor to receive personalized advice. A tax advisor can analyze your individual situation, provide you with specific recommendations, and help you minimize your inheritance tax and protect your assets to the best of your ability.
I hope that my response has given you a first insight into the possibilities of tax optimization in an inheritance. If you have any further questions, I am at your disposal and wish you all the best in resolving this important matter.
Sincerely,
Dietrich Hohenadel, Tax Advisor
