Germany Law and Practice

A Bare Summary, as at 1 January 2026

This document is provided for general guidance only and does not constitute legal, tax or fiduciary advice. Estate planning is bespoke to each individual, and professional advice tailored to your specific circumstances and relevant jurisdictions should always be obtained. Laws and regulations may change from time to time, and reliance should not be placed on this document
without appropriate professional confirmation.

1. In Case of Mental and/or Physical Incapacity

German law allows for a legal representative to be appointed either through a lasting power of attorney or by court. A power of attorney (“Vorsorgevollmacht”) allows individuals to choose who will manage their affairs should they become incapable of doing so. If such a document does not exist, a court may appoint a guardian (“Betreuer”). The appointee has the authority to manage financial, legal, and personal matters, but certain significant decisions may require court approval to safeguard the person’s interests.

It is well advised to make a lasting power of attorney, which may come in two parts ‘property & financial affairs’ and ‘health & welfare’. Separately, and typically, one may make a living will (“Patientenverfügung”) setting out their wishes for medical care and medical decisions in certain circumstances.

2. Death/Estate Taxes

German inheritance tax is levied on the acquisition of assets or shares of assets under inheritance law. Unlimited inheritance tax liability in Germany is based particularly on domicile and habitual residence, which applies to the testator and, unlike many other legal systems, also to the heir/ legatee. Limited inheritance tax liability is linked to German assets when the testator/heir live abroad.

Tax liability primarily depends on the heir’s relationship with the testator and the acquisition value. So, each heir/beneficiary is liable for tax, not the estate. Allowances ranging from € 20,000 (distant relatives or non-relatives) to € 500,000 (spouses) and additional allowances for maintenance (256,000 for spouses, 10,300 to 52,000 for children up to 27 years), and tax rates from 7 % to 50 %; close relatives benefit from higher exemptions and lower rates.

Various tax relief options and exemptions exist, especially for operative business assets. Effective asset evaluation, consolidated asset listing, and exemption calculations are crucial, particularly in complex corporate structures, to make optimum use of the legal tax benefits.

3. The Probate Procedure

If a will exists, it must be presented to the probate court. The court examines the will’s validity and appoints executors if stipulated by the testator. In cases of intestacy, statutory law determines heirs based on kinship.

An important part of the process is the issuance of the certificate of inheritance (“Erbschein”), confirming the heirs and their respective shares. This document may be crucial for heirs to access bank accounts, transfer property, and undertake other legal actions related to the estate. However, a certificate of inheritance is not always required, especially if there is a notarised will and the estate does not include real estate or company shares.

4. Landed Property Law

Inherited land is subject to the same procedural steps as other parts of the estate but comes with additional requirements. The certificate of inheritance serves as proof for the land registry (“Grundbuch”). It’s worth noting that inheritance of real estate can have significant tax implications and that provisions under German law may grant tax relief to the spouse and children of the deceased who continue to live in the family home or move into the family
home immediately after the inheritance. Also, early planning during one’s lifetime can enable tax-optimised private succession (in real estate), e.g. by way of lifetime transfer subject to usufruct.

SIM Bock Eng – 1 January 2026

bockeng.sim@wongpartnership.com