How it works in the U.S. and why there is so little in Germany

How it works in the U.S. and How it works in the U.S. and why there is so little in why there is so little in

GermanyGermany

OverviewOverview

I. The German Law Of Succession1. Basic Principles2. Example Case

II. Estate Planning1. Statistics2. Why is there so little estate planning in Germany - Ideas3. Analysis

III. Outlook

German German LawLaw

Basic Principles in German Law of succession

• Testamentary freedom• Estate belongs to the family• Universal succession• Forms of a Will

TestamentaTestamentary freedomry freedom

• Basic principle throughout German private law: private autonomy

• Law of succession: testamentary freedom– Testator can dispose over all of his estate

freely– Limits:

• § 138 BGB (Bürgerliches Gesetzbuch) Good Manners

• Forced heirship

Family Family EstateEstate

• The estate belongs to the family– Limit of testamentary freedom– Estate goes to family

• Closer relatives get the money first• If there is no family, the state gets the

estate

– At least ½ of what they would get with intestate succession

Universal Universal SuccessionSuccession

• Estate goes to beneficiary as a whole including debts

– If there are more they own it together

– No act of conferring necessary

Forms of Forms of WillWill

• Handwritten will• Handwritten mutual will• Notary public will• Notary public mutual will• Contract

Sample Sample Case 1Case 1

Father

Mother

Child 1

Child 2

Child 3

Grand-child 1

Grand-child 2

Grand-child 3

Grandfather

Grandmother

1/2

1/6

1/6

1/6


Father

Mother

Child 1

Child 2

Child 3

Grand-child 1

Grand-child 2

Grand-child 3

Grandfather

Grandmother

1/2

1/6

1/6

1/6

1/12

1/12


Father

Mother

Child 1

Child 2

Child 3

Grand-child 1

Grand-child 2

Grand-child 3

Grandfather

Grandmother

Mutual Will

1/1

1/12

ContentContent



Estate Estate Planning Planning StatisticsStatistics

29,1

69,2

Yes

No

Have you got a will or a succession contract yet?all people ages 18 +

57,2

42,7

Yes

No

people ages 60 +

44 55 55 65 75 71 85

50 - 5455 - 5960 - 6465 - 6970 - 7475 - 80 80 +

USA: people ages 50 +


How did the testator state his will?

40,84%

14,38%

24,18%

16,25%4,08%

handwritten

h.w. mutual

n.p. mutual

notary public

contract


Did anybody help you with the will?

32,30%

18,00%

15,50%

11,50%

28,00%

notary

public

w/ sample

friend

attorney

w/o help

Why so Why so little? - Ideaslittle? - Ideas

• Same law in all parts of Germany• German law is easier to understand• Not so much testamentary freedom• Law (intestate succession) does what

people want• Only lawyer may give legal advice• People are not aware of what they

could save

AnalysisAnalysis

• Same law in all parts of Germany– In the U.S. the UPC is only part of 18

states’ law– The Law of succession is part of the

German BGB and thus rules all over the country

– Germans don’t move around as much as the Americans do Families are closer togehter

AnalysisAnalysis

• Germans law is easier to understand– Over 50 % handwritten wills show that it

is easy for Germans to make a will– Also the high number of mutual wills

shows that especially married couples understand and use this form of will

– German law of succession is explained in multiple newspapers and magazines (at least for those without marriagecontract)

AnalysisAnalysis

• Not so much testamentary freedom– In the U.S. you can effectively exclude

relatives from your will – In Germany you can only really dispose

over half of your estate because of forced heirship

But: That’s a point where estate planningcan be an effective option !

AnalysisAnalysis

• Law (intestate succession) does what people want– People in Germany comply with the law

of intestate succession– Tax increases if you deviate from the

system of the BGB

AnalysisAnalysis

• Only lawyers may give legal advice

– There is a law on legal advice in Germany– Tax accountants are forbidden to give

legal advice – except from such connected to their tasks

– Banks and financial planners may neither

AnalysisAnalysis

• People are not aware of what they could save– People in Germany are not aware of the

high tax rates that their relatives have to pay if they die

– They don’t know the ways to transfer their estate during their lives and thus to use allowable deductions

ContentContent



III. Outlook

„Estate Planning“ getsmore known

There are „Estate Planners“ out there

talking about it

Universities start offering „Estate Planning“ as a Subject

OutlookOutlook

People become awareof „Estate Planning“

Demand increases

More Universities offer „Estate Planning“ as a Subject

QuestionsQuestions

?

Thank You !

Documents

How it works in the U.S. and why there is so little in Germany