Heirs are entitled to different inheritance tax allowances.
(Photo: dpa)
Berlin Sometimes the joy of a considerable fortune in the case of an inheritance lasts quite briefly. This applies above all if the inheritance tax reduces the inheritance more than initially thought by those involved.
This is possible, for example, if allowances have unexpectedly already been used and therefore cannot be used as originally assumed. This is what happened to siblings in a case that the Federal Fiscal Court recently decided (Az. II R 1/20).
Both the grandfather, who died in 1960, and the grandmother, who died in 1992, had designated the siblings together with others as heirs. However, they were all intended only as heirs.
This means that the assets should only pass to them at a later date. Because the established order of inheritance said that an aunt of the two had previously been considered as the previous heir. Only when they died in 2015 did the entire inheritance go to the siblings, among others.
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In their inheritance tax return, they applied to have their family relationship with their grandparents taken into account as the basis for taxation. Since the father of the siblings had already died, the responsible tax office put one in when calculating the tax Allowance of 400,000 euros perish.
Order of inheritance relevant
However, the heirs were of the opinion that they should be entitled to this amount twice – once as their grandfather’s heirs and once as their grandmother’s heirs. However, the Munich Finance Court dismissed your corresponding action.
The judges justified their decision with the fact that the assets had passed from the same previous heir to the siblings. In terms of inheritance tax, this is an inheritance.
In the subsequent revision, the Federal Fiscal Court confirmed the decision of the lower court. A different approach applies in financial law than in civil law.
Thus, under civil law, the aunt would have been the heiress of the grandfather and later of the grandmother. In the next step, after her death, the siblings would also inherit the grandparents.
In terms of financial law, on the other hand, they are regarded as the heirs of the aunt. Accordingly, it follows that the allowance can only be used once.
>> Also read: What is the exemption for inheritance tax?
If the aunt also appointed the siblings as heirs, there are even two cases of inheritance according to civil law. The first would relate to the property received from the grandparents in the form of post-inheritance, the other to that received from the aunt.
In terms of tax law, however, the inheritance also merges into one inheritance in this case. Lawyers speak of a “uniform acquisition from the previous heirs”.
The siblings are therefore entitled to an exemption. In the present case, this amounts to 400,000 euros, since they used the possibility of inheritance tax law to apply for taxation based on the relationship with the grandparents as the original testators.
This means that if the succession is structured in several steps, the subsequent heirs have the right to choose with regard to the tax-free allowance. Each of them can submit this application individually. The relationship to the testator must be stated. They are thus granted the most favorable exemption amount for them.
However, no further allowance can be claimed beyond this amount. This applies regardless of whether, as in the case of siblings, both grandfather and grandmother – and thus two testators – have transferred assets or whether the aunt’s inheritance ultimately flows to the heirs together with the other assets. Only in the event that the received allowance is not used up by the grandparents’ inheritance could it be offset against the additional inheritance.
Time of inheritance can be chosen
A preliminary heir is basically a “temporary heir”. The transfer of assets to the subsequent heirs does not necessarily have to take place with the death of the previous heir.
A testator can also set a different time in their will. It is conceivable here, for example, that the later heirs have come of age.
The limited power of disposal over the assets is decisive for those who inherit the property for a limited period of time. Because this must be passed on to the next heir in full. It is only different if the previous heir was freed from certain restrictions in the will.
Are you interested in this tax tip? You can find more articles at our cooperation partner Haufe.de.
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