I. Problem definition
Private asset succession is complex, as economic, legal, tax and personal aspects need to be taken into account. The consideration of various ten-year periods is one of several challenges that need to be taken into account as part of forward-looking succession planning. An overview of some selected ten-year periods is therefore provided below.
II. Ten-year period and claim to supplementary compulsory portion pursuant to Section 2325 (1) BGB
The right to a supplementary compulsory portion pursuant to Section 2325 BGB ensures that gifts made by the testator within the last ten years prior to death are taken into account when calculating the compulsory portion. Pursuant to Section 2325 (3) BGB, the gift is taken into account in full in the first year prior to the death; for each additional year prior to the death, the value to be recognised is reduced by one tenth. The ten-year period does not begin if the testator retains full economic power of disposal over the asset due to rights of use in rem. This must be taken into account in particular when usufruct or residential rights are agreed.
III. Ten-year period and claim for repayment due to impoverishment of the donor pursuant to Section 528 (1) sentence 1 BGB
If the donor himself becomes needy within ten years of the gift and is no longer able to support himself, he has the right to demand the return of the gifted assets in accordance with Section 528 BGB. However, the donee can avert this claim for restitution by making a corresponding monetary payment. If the need only arises after ten years, a claim for restitution under Section 529 BGB is excluded; even a right of use reserved for the donor does not extend this period. In the event of need, the social welfare organisation can transfer the claim for repayment from the donor to itself in accordance with Section 93 SGB XII in conjunction with Section 528 BGB and assert it against the donee. This problem can be countered, among other things, by transferring assets at an early stage.
IV. Ten-year period for multiple acquisitions from the same person Section 14 (1) sentence 1 ErbStG
Ten-year time limits must also be observed in the area of inheritance and gift tax. For example, according to Section 14 (1) sentence 1 ErbStG, all acquisitions that a person receives from the same person within ten years are added together. This means that the most recent acquisition also takes into account earlier gifts at their value at the time. One of the consequences of this is that the personal allowance under Section 16 ErbStG can only be utilised once in total for all acquisitions from the same person within the ten-year period.
| Relationship (Purchaser to testator/donor) | Tax-free amount in EUR |
|---|---|
| Spouses, registered partners | 500.000 |
| Children, stepchildren, children of deceased children and deceased stepchildren | 400.000 |
| Children of living children and stepchildren | 200.000 |
| Great-grandchildren, parents and previous parents etc. in the event of acquisition by reason of death | 100.000 |
| Parents and previous parents for gifts | 20.000 |
| all others (e.g. siblings, children-in-law, nieces/nephews) | 20.000 |
The tax-free amount may therefore be fully or partially utilised by previous gifts. The aggregation of several acquisitions can also lead to a higher tax rate being applied if the most recent acquisition, together with the previous acquisitions, exceeds a higher tax bracket. For this reason, it should always be checked before any major gift whether and to what extent gifts have already been made in order to avoid tax disadvantages.
Conclusion: Planning asset succession with foresight
In addition to the deadlines described here, other statutory deadlines may also become relevant in the context of asset succession planning, depending on the individual situation. However, the brief overview of the ten-year deadlines selected here already shows how important early and careful planning is in order to ensure successful asset succession. Would you like to plan your asset succession in a legally, fiscally and economically well thought-out manner?
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Note: This article is intended to provide general information and does not replace individual legal advice. We will be happy to provide you with a personalised assessment of your situation.
„My aim is to structure complex issues clearly and comprehensibly and to find practical solutions.“
Dr Lukas Friedrich
Attorney specialising in inheritance law at PLANARIS
