You just learned you have an inheritance in Germany. Perhaps a German Court has notified you that you are an heir under a will or you have received notice that you may be an heir under Germany’s intestate succession laws. What should you do?
Under Germany’s inheritance laws a decedent’s property passes directly to his or her heirs at the time of death. The same rule applies to the decedent’s obligations, which means that in addition to any assets you may inherit, you inherit the debts in Germany as well. As an heir, you can either accept (expressly or tacitly) or renounce the inheritance in its entirety. But if you accept the inheritance, you assume not only all the rights that come with that, you also assume all the debts and obligations as well. So, without doing anything you might suddenly find yourself personally liable for a decedent’s debts.
It is possible to disclaim an inheritance in Germany, but to do so you must act quickly to meet various deadlines and to comply with various statutes of limitations, some as short as six weeks. If you live in the United States, you have six months to disclaim an inheritance in Germany. Though acceptance of an inheritance does not have to be expressly stated, you must explicitly renounce an inheritance to avoid its obligations.
Often there is not enough time to get a full picture of the value of the estate you stand to inherit, but it is nonetheless important that you pay attention to the deadlines. Usually no executor or administrator will be appointed and there will be no substantial probate proceedings; estates in Germany are rarely supervised by a court and because German law does not provide for living trusts, there will be no trustee taking title to decedent’s assets in Germany.
To further complicate things, certain acts constitute acceptance of an inheritance under German law, such as applying for a certificate of inheritance, which is necessary to transfer title to inherited property or to settle bank accounts and claims in Germany.
If you do end up accepting an inheritance from Germany, you will face inheritance tax liabilities in Germany and you will need to file an inheritance tax return there before being able to receive your inherited assets. Germany taxes each heir and beneficiary individually, not the estate itself. Tax rates and exemptions vary depending on the degree of kinship and the amount inherited. The United States does not impose an inheritance tax at the federal level, but you may have state law estate tax obligations depending on where in the United States you live.