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

Overview I. The German Law Of Succession 1. Basic Principles 2. Example Case II. Estate Planning 1. Statistics 2. Why is there so little estate planning in Germany - Ideas 3. Analysis III. Outlook

German Law Basic Principles in German Law of succession Testamentary freedom Estate belongs to the family Universal succession Forms of a Will

Testamentary 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 Estate 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 Succession Estate goes to beneficiary as a whole  including debts –If there are more they own it together –No act of conferring necessary

Forms of Will Handwritten will Handwritten mutual will Notary public will Notary public mutual will Contract

Sample Case 1 FatherMother Child 1Child 2Child 3 Grand- child 1 Grand- child 2 Grand- child 3 Grand father Grand mother 1/2 1/6

Sample Case 2 FatherMother Child 1Child 2Child 3 Grand- child 1 Grand- child 2 Grand- child 3 Grand father Grand mother 1/2 1/6 1/12

Sample Case 3 FatherMother Child 1Child 2Child 3 Grand- child 1 Grand- child 2 Grand- child 3 Grand father Grand mother Mutual Will 1/1 1/12

Content I. The German Law Of Succession 1. Basic Principles 2. Example Case II. Estate Planning 1. Statistics 2. Why is there so little estate planning in Germany - Ideas 3. Analysis

Estate Planning Statistics Have you got a will or a succession contract yet? all people ages 18 + people ages 60 + USA: people ages 50 +

Estate Planning Statistics How did the testator state his will?

Estate Planning Statistics Did anybody help you with the will?

Why so little? - 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

Analysis 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

Analysis 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 marriage contract)

Analysis 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 planning can be an effective option !

Analysis 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

Analysis 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

Analysis 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

Content I. The German Law Of Succession 1. Basic Principles 2. Example Case II. Estate Planning 1. Statistics 2. Why is there so little estate planning in Germany - Ideas 3. Analysis III. Outlook

„Estate Planning“ gets more known There are „Estate Planners“ out there talking about it Universities start offering „Estate Planning“ as a Subject Outlook People become aware of „Estate Planning“ Demand increases More Universities offer „Estate Planning“ as a Subject

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