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Settlement of inheritance tax declaration in connection with a community of heirs.

February 3, 2014 | 40,00 EUR | answered by Peter Lipp

Following case:
During his lifetime, V appoints his daughter T as the usufructuary heir in his will, and appoints the son of T - his grandson E - and his son S as remainder heirs.
When V dies, T inherits V's house, land, and assets.
Four years later, T also passes away.

E, the son of T, as an only child, inherits everything from T at a ratio of 1/1 that does not fall under V's testamentary estate. According to V's testamentary estate, S, V's son, and E are remainder heirs after T, forming an inheritance community.

E is requested by the tax office to file an inheritance tax return. He fills out the declaration mostly by himself, but seeks a tax advisor for some uncertainties.

The tax advisor prepares two declarations. One for the estate of T and one for the estate of V, each addressed to E. He issues two invoices for each declaration according to § 24 I No.12 StBVV. Total values for the respective estates are determined according to StBVV for the invoices of both declarations.

Question 1: Is the "double" valuation of the estates correct, or is only one declaration needed where both estates are processed for E?

Furthermore, the tax advisor sets the full value of the inheritance as the total value for the invoice in the inheritance tax declaration for the estate of V, not just the 1/2 share that E is entitled to, but 2/2. Accordingly, in the declaration, he not only clarifies E's tax liability but also S's tax liability.
He did this unsolicited, as neither E nor S had given a corresponding order, and E only wanted his own tax liability addressed.

Question 2: Is it common practice for tax advisors to handle the entire estate in the case of inheritance communities (similar to how court costs are calculated for inheritance communities), setting the complete value of the inheritance as the total value for the advisor's compensation, or should the advisor only handle the portion that is actually relevant to the client when given the corresponding order (e.g. 1/2 of the inheritance)?

Due to E's preliminary work, the tax advisor has comparatively little effort. He sets a fee share of 6/10 (according to § 24 I No.12 StBVV, the range between 2/10 and 10/10 is permissible). Nothing was agreed upon in advance between E and the advisor regarding this.

Question 3: Can E subsequently raise any kind of legally valid objection against the fee rate chosen by the advisor?

I would appreciate a helpful response.

Best regards

Peter Lipp

Regarding question 1, according to § 6 ErbStG, those on whom the assets pass upon the occurrence of the subsequent inheritance must declare the acquisition as originating from the predeceased heir. See also line 16 of the inheritance tax return form. The information about the predeceased heir is provided there. Since there is only one deceased person, in my opinion, a tax return is sufficient for the heir.

Regarding question 2, according to § 24 No. 12 StBVV, the subject value of the inheritance tax return is the value of the respective inheritance. If the inheritance tax return is prepared for the community of heirs, then the entire assets are considered. If it is prepared for only one heir, then only the portion that falls to him. Of course, it may be necessary to initially determine some values for the community before they are divided. This can then be calculated separately or compensated with higher fractional assessments.

Regarding question 3, the tax advisor operates within the legal limits set by the StBVV with a ratio of 6/10. Therefore, if there is no offer, order, or other agreement, he can bill in this way.