According to estimates, about every second inheritance now includes real estate. To avoid disputes over the inheritance, many prefer to take care of it during their lifetime. Real estate, money and companies can be transferred to descendants at an early stage. However, there are also pitfalls.
If you have not regulated your inheritance in your will, the law decides on the succession. Heirs are then spouses, children or grandchildren, parents or siblings. If the inheritance goes to three children, for example, it would be divided among them. Each child would therefore receive one third. While money is relatively easy to divide, dividing a property by three is more difficult. Inheritance often poses great challenges. Even if the heirs agree, the inheritance marathon costs a lot of time and effort.
That is why more and more Germans are transferring their inheritance during their lifetime. In official language, this is called anticipated succession. This way you can 1. decide for yourself who gets what. And 2. inheritance tax and the compulsory portion can be reduced. However, it is better to seek advice from a real estate professional. The preliminary inheritance is particularly useful if the property is to be transferred to certain persons, such as spouses or children. In this way, you can, for example, give your children a carefree start to their professional life or provide security for your spouse.
However, the preliminary inheritance is not a pure gift. If the real estate loan has not yet been paid off or there are debts, these are also transferred. In addition, a transfer is usually linked to conditions. After all, if you transfer all your assets - whether money or real estate - during your lifetime, you are giving away your livelihood. Therefore, it is important for you to secure your livelihood by retaining rights to the assets. This is because you are allowed to use and manage the transferred assets. This is called usufructuary rights. It is therefore advisable to regulate all conceivable interests and your rights to the assets in the transfer agreement.
If you transfer your property to your future heirs ahead of time, a lifelong right of residence for the bequeather is usually stipulated in the contract. This means that your home cannot be sold or rented out as long as you live in it. It is also advisable to include reversionary rights in the contract. With these, you have the possibility to reclaim the transferred assets. In this way, you become the owner again. This is important if your heir wants to sell the property or is in debt. If private insolvency is imminent, you can reclaim your inheritance. This ensures that the inheritance is not completely lost.
In order not to lose the overview as a testator, it is advisable to consult a real estate professional. He or she will advise you on how best to secure your real estate inheritance.
Are you wondering what to do with your inherited property? Contact us. We will be happy to advise you.
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