I am German living in England with property in both. Can I leave all German assets to my German nephew, and all English assets to my children in England, or do I have to leave a percentage of German assets to my children?
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What further information do you require? My German assets are shares in a family business now run by my nephew. My English assets are shared with my English husband. To avoid steep inheritance tax on my children, can I gift the German assets to my nephew who would then be liable to pay that side of the tax?
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Dear Sir or Madame,
you do not have to leave a percentage of the German assets German law is applicable to (especially real estates) to your children, but in this case the will be able to claim a percentage (Pflichtteil) from your nephew and/or the other inheritors.
The Pflichtteil is half of the amount your children would inherit by law.
The point is, to avoid the huge inheritance tax my children would have to pay, if I leave the German assets to my nephew, would he pay all the tax, or are my children forced to accept a percentage of the assets and thus have to pay the equivalent IHT?
No your children will not forced to claim anything. It's up to them.
LL.M. in International Trade Law (Newcastle upon Tyne, UK)
Still not quite clear. You need to bear in mind the assets in England. I do not want my children to opt out of all inheritance. Is it possible to refuse any German inheritance and hence IHT on that asset which is also taxed in England, but to accept the English assets? Is it an all or nothing? Is it 25% or 50% which must be accepted of the German assets if all the English assets are inherited?
If you have only the German citizenship, generally German law would be applicable, see Art. 25 EGBGB.
However, there may be exceptions especially regarding real estates outside Germany.
Both a German and an English court would apply Englis/Welsh/Scottish) law for such an estate.
The easiest way would be to give your children the assets in UK by a legacy (Vermächtnis) respecting UK-law (in order not to have trouble with validity in the UK). This way these assets in the UK will be out of the inheritance before the inheritance is divided.
Make sure to ask a collegue doing UK-inheritance law in oder not to commit an error.
For movable goods in the UK courts in UK an Germany would in some cases apply different laws as in UK usually the (last) domicile the relevant point vs. the nationality in Art. 25 EGBGB.
The rest for the German assets for your nephew may be arranged via a German Testament according to German law.
And if I put it in a will, so that on my death both German and English assets are judged at the same time, would that force a percentage of the German assets to be distributed to my children who would then need to sell all the Assets here to pay for the tax on German shares. I am trying to force my nephew to take all that problem off my childrens hands.
German law does not force you to give a percentage to your children. It is their issue to claim that percentage from the successor(s).
If German authortities get to know about assets in the UK, they will claim German inheritance tax (minus the tax payed in the UK) as there is no applicable blaterial tax agreement.
However I am not an expert on that tax topic, I am sorry.
Herr GoetzVielen Dank
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