Inheritance Self-Help Group: Inherited money, what to do? Step-by-Step

Inheritance & Estate

You are not alone — and you have less time than you think.

The numbers speak for themselves: wealth transfers through inheritances and gifts regularly reach peaks beyond the 121-billion-euro mark in Germany. The current figure comes from the Federal Statistical Office. Hundreds of thousands of people face the same questions as you every year. Use this.

Important Deadlines: What You Need to Know Immediately

Before you think about investment strategies: An inheritance has strict legal deadlines. Those who miss these may inherit debts or pay unnecessary penalty interest.

The Five Critical Deadlines at a Glance

• 6 weeks — Deadline for renouncing the inheritance (from knowledge of the inheritance case and being called as an heir)
• 6 months — Extended renunciation deadline for foreign inheritance
• 3 months — Notification obligation to the tax office for inheritance tax
• 3 years — Deadline for the tax office to set inheritance tax
• 30 years — Statute of limitations for compulsory share claims (normally 3 years from knowledge)

Warning: Anyone who does nothing in the first weeks is automatically considered an heir — including all debts of the deceased.

First Steps After an Inheritance

The first and most important step after an inheritance is to remain calm — but not for too long. Many people feel overwhelmed by the new situation, especially if the inheritance is complex. You should take time to get an overview of the overall situation before making important decisions. A well-thought-out approach helps to optimally utilize the inheritance.

Checklist: The First 14 Days

1. Request multiple death certificates from the local registry office (at least 5 originals)
2. Have the will opened at the probate court, if available
3. Apply for a certificate of inheritance, if necessary
4. Review bank accounts, investment accounts, insurance policies, and contracts
5. Request land register extracts for existing real estate
6. Create an inventory of the estate (assets and liabilities)
7. If there is suspicion of over-indebtedness: Check the possibility of renouncing the inheritance
8. Contact a tax advisor and possibly a specialist lawyer for inheritance law

Check and secure documents

Secure all important documents such as wills, land register extracts, insurance policies, bank statements for the last twelve months, and ongoing contracts. These documents form the basis for all further steps and are crucial later for the inheritance tax declaration.

No hasty sale

Real estate, artworks, or other valuables should not be sold hastily. Have the value professionally assessed to ensure that you achieve the correct price. For real estate, a certified market value appraisal is often worthwhile — also for the correct determination of inheritance tax.

Seek professional advice

Experts such as tax advisors, specialist lawyers for inheritance law, or asset managers can help you clarify the legal and financial aspects of the inheritance. For inheritances over 500,000 euros, the advice becomes practically indispensable.

Tip: An inheritance self-help group can provide valuable guidance as a supplement — especially during the initial emotional phase.

Declining an inheritance: When is it worthwhile?

Not every inheritance is a gain. If the estate is over-indebted or contains more burdens than assets, you can decline the inheritance — but only within six weeks.

Reasons for declining an inheritance

• The deceased’s debts exceed their assets
• Rehabilitation-required real estate with high remaining debt
• Claims of third parties for compulsory portions that consume the estate
• Tax burden exceeds the value of the inheritance
• Strategic transfer to the next generation (generation leap)

How the decline works

The decline must be personally declared to the probate court or notarially certified. The fee depends on the estate’s value and usually ranges between 30 and several hundred euros. Important: A decline applies to the entire inheritance — picking cherries is not possible.

Note: If you are unsure about the debt situation, you can apply for a probate insolvency proceeding or a probate administration — your personal assets will then be protected.

Inheritance and taxes: Exemptions and tax classes

An inheritance brings tax obligations. The amount of inheritance tax in Germany depends on the family relationship and the value of the inherited assets. To avoid unpleasant surprises, you should know the exemptions and tax classes precisely.

Table: Exemptions and tax classes

Calculation example: Daughter inherits 750,000 euros

• Inheritance: 750,000 €
• Exemption (tax class I): 400,000 €
• Taxable gain: 350,000 €
• Tax rate: 15 % (tax class I, up to 600,000 €)
• Inheritance tax: 52,500 €

Special regulation: Self-occupied property

If spouses or children inherit the family home and continue to live in it for another ten years, it remains completely tax-free — for children up to a living area of 200 square meters. Those who move out earlier lose the exemption retroactively.

More details on inheritance tax classes can be found in the specialist portal.

Note: A tax advisor is indispensable for assets beyond the exemptions — the consultation costs are usually between 0.3 and 1 % of the tax savings.

Heirs’ community: When multiple people inherit

When multiple people inherit together, an heirs’ community is automatically formed. This is one of the most common sources of conflict in German inheritance law — and one of the main reasons why self-help groups are so in demand.

Typical conflict areas

• Should the property be sold, rented out, or used personally?
• How will the household goods be divided?
• Who will manage the estate?
• How will compulsory portions be fulfilled?

Solutions

1. Settlement agreement among heirs — consensual division, notarially certified
2. Withdrawal — one heir is paid out and leaves the community
3. Mediation — often cheaper than a court process in deadlocked conflicts
4. Partition auction — last option in complete blockage (often with value loss)

Insider tip: A partition auction regularly results in proceeds 20 to 40 % below the market value. An out-of-court agreement is almost always more economical.

Inherited property: Sell, rent out, or use it yourself?

In most larger inheritances, a property is the most valuable component. The decision on what to do with it shapes your financial future for decades.

Decision matrix

More on this: Buying and holding real estate.

Investing the inheritance: Real estate, ETFs or savings account?

Many heirs face the question of how they can use the inherited wealth meaningfully. A good investment strategy is crucial to preserve or increase the value of the inheritance. Diversification minimizes risks — focusing on one asset class maximizes them.

Investment strategy based on inheritance amount

• Investing 1 million — Strategies for seven-figure wealth
• Investing 10 million — Family office level

Example allocation: 500,000 euros inherited

• 50,000 € (10 %) — Money market account as emergency fund and liquidity buffer

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]]> https://lukinski.com/family-foundation-costs-tax-benefits-advisors-experiences-founding/ Thu, 24 Aug 2023 13:31:47 +0000 https://lukinski.de/family-foundation-costs-tax-benefits-advisors-experience-and-establishment/ A family foundation typically costs between 15,000 and 80,000 euros to establish — with complex structures involving business interests even reaching six figures. Yet this number is only half the truth: the really relevant costs arise in the long term through inheritance tax (every 30 years), ongoing management, and an often overlooked detail — choosing the wrong advisor. Anyone wishing to transfer a family fortune of about 1 million euros can regularly save six- to seven-figure amounts in inheritance and income tax over the lifetime of the foundation. Prerequisite: the structure is tax-compliant from the beginning. This guide shows all cost positions, concrete calculation examples, and the pitfalls that real insiders know.

Why do you establish a family foundation?

When establishing a foundation, the founder transfers assets to an independent legal entity. Transferable assets include cash, real estate, shares, fixed deposits, and participations. In a family foundation, this wealth is exclusively used to support the founder’s family — across several generations.

The three main reasons for a family foundation

1. Intergenerational transfer without inheritance disputes: Assets do not go into the estate — statutory share claims become void (provided the ten-year deadline is met)
2. Asset protection: Protection against access by spouses (marital assets), creditors, company insolvency, and statutory share claimants
3. Tax optimization: Ongoing income is taxed at approximately 15 % corporate tax + solidarity surcharge instead of up to 45 % income tax

The most important things about a family foundation at a glance

Aspect	Key Facts
Startup costs (simple)	15,000–25,000 Euro (cash, standard structure)
Startup costs (complex)	30,000–80,000+ Euro (Real Estate, company shares)
Minimum capital	25,000–100,000 Euro depending on federal state
Annual running costs	3,000–15,000 Euro (accounting, tax advisor, board)
Corporate tax	15 % + 5.5 % solidarity surcharge = effectively 15.825 %
Succession tax	Every 30 years — like an inheritance to two children
Sensible from assets	Rule of thumb: from about 1 million Euro transferable assets
Recognition period	3–9 months depending on foundation authority

Advisor: necessary or luxury?

The establishment of a family foundation is unique and practically irreversible. A faulty bylaw can only be amended later with the approval of the foundation authority — and even then only within narrow limits. Those who cut corners here risk seven-figure tax disadvantages over decades. Advice is not a luxury, but an economic necessity.

Family Foundation Costs in Detail

The most common question: What does a family foundation really cost? The answer depends on three factors — type of assets, complexity of the family structure, and federal state. Here is the full breakdown.

One-Time Founding Costs

Position	Cost range	Note
Legal advice & bylaws	5.000–25.000 Euro	Stiftungsrecht-Spezialist
Tax structuring	3.000–20.000 Euro	Including gift tax optimization
Notary fees	1.000–5.000 Euro	When transferring real estate, the cost is significantly higher.
Recognition fee authority	200–2.500 Euro	Je nach Bundesland
Grunderwerbsteuer (Immobilien)	3.5–6.5 % of the assessed value	Warning: applicable when transferring to a foundation!
Bewertungsgutachten	1.500–8.000 Euro	Bei Unternehmen/Immobilien Pflicht

Annual running costs

• Bookkeeping & Year-End Accounts: 1,500–6,000 Euro
• Tax advisor (corporate tax return): 1,000–4,000 Euro
• Board compensation (if external board): 0–10,000 Euro
• Auditors (from a certain size): 3,000–15,000 euros
• Stiftungsaufsicht / Berichtspflichten: 0–500 Euro

Hidden costs

• Succession tax every 30 years: The foundation’s assets are treated as if they were inherited by two children — tax exemption 2× 400,000 euros
• Transfer tax on contribution: Often forgotten; for a rental property worth 2 million euros = up to 130,000 euros
• Gift tax on initial furnishings: Family foundation is considered the “most distant relative” — tax class III, only 20,000 Euro tax exemption (exception: favored family foundation with application of tax class I)
• Later amendment of the bylaws: Any subsequent amendment costs again 3,000–10,000 euros plus administrative procedures

Minimum capital of a family foundation

The Civil Code (§ 80 BGB) does not specify a concrete minimum capital requirement. The capital merely needs to be sufficient to ensure the “permanent and sustainable fulfillment of the foundation’s purpose.” Specifically, this means: The foundation authorities of the federal states set their own thresholds.

Minimum capital by federal state (guidelines)

Practical threshold	Meaning
25,000 Euro	Absolute lower limit in some federal states
50,000 Euro	Most common recognition threshold
100,000 Euro	Bavaria, NRW (major cities) — for purely monetary foundations
500,000+ Euro	Practically meaningful lower limit for real tax benefits

Rule of thumb: When does a family foundation really make sense?

Even though legally 50,000 euros suffice — economically, a family foundation only makes sense starting with a transferable asset of about 1 million euros. Reason: With annual running costs of approximately 5,000 euros, the tax savings must permanently exceed these fixed costs. With a property management real estate structure generating an annual rental surplus of 50,000 euros, the foundation already provides a tax advantage of 12,000–15,000 euros per year.

Special Case: Non-Independent Trust Foundation

These legal constructs are not independent legal entities, but a contract between founder and trustee. Advantages:

• No official recognition required
• Minimum capital freely selectable (often already meaningful from 25,000 euros)
• Founding costs 30–50 % lower
• However: Weaker asset protection, dependent on the trustee



Tax Implications as a Central Cost Factor

For every donor, it holds true: The advisory costs of 20,000–40,000 euros are economically irrelevant if the tax structuring is done properly. The real levers lie in the ongoing taxes and the transfer itself.

Comparison: Individual vs. GmbH vs. Family Foundation

Structure	Ongoing tax burden on rent	Upon sale after 10 years
Private individual (top tax rate)	up to 45% + solidarity surcharge	tax-free (speculation period)
Wealth management GmbH	approx. 15.825% (income tax + solidarity surcharge)	approx. 15.825% on profit
Family foundation (wealth managing)	approx. 15.825%	tax-free after 10 years possible
Family foundation (commercial)	approx. 30% (income tax + trade tax)	fully taxable

The succession tax — the most critical cost factor

Every 30 years, the family foundation is treated tax-wise as if the entire wealth were inherited by two children. This means:

• Exemption amount 2× 400,000 euros = 800,000 euros tax-free
• Tax class I (favored)
• With a foundation wealth of 5 million euros: succession tax approx. 600,000–800,000 euros
• Deferral possible for up to 30 years

Insider Strategy: Before the 30-year period, distribute wealth exclusively or reduce the taxable base through sub-foundations / holding structures.

Calculation Example: Family with 3 million Euro real estate assets

Position	Private Ownership	Family Foundation
Annual net rental income	120,000 Euro	120,000 Euro
Annual tax burden	approx. 50,000 Euro (42%)	approx. 19,000 Euro (15.825%)
Tax benefit per year	—	+ 31,000 Euro
Cumulative over 30 years	—	+ 930,000 Euro
One-time setup costs	0 Euro	– 40,000 Euro
Ongoing costs over 30 years	0 Euro	– 180,000 Euro
Succession tax after 30 years	—	– 350,000 Euro
Net benefit over 30 years	—	+ 360,000 Euro

Consultancy costs and selection of the right experts

The foundation law in Germany is not uniformly regulated at the federal level — each federal state has its own foundation laws. In addition, there is the interface with tax law, inheritance law, and corporate law. Therefore, comprehensive advice is not a luxury.

Typical Advisor Fees by Wealth

Foundation Wealth	Typical Advisory Fee
500,000–1 million Euro	10,000–20,000 Euro
1–5 million Euro	20,000–40,000 Euro
5–20 million Euro	40,000–100,000 Euro
20+ million Euro / Corporate Foundation	100,000+ Euro (often hourly rate)

Cash Foundation vs. Real Estate Foundation — Cost Difference

A pure cash foundation is significantly cheaper to establish than a real estate or corporate foundation. Reasons:

• Appraisal reports are not required (the value of cash is obvious)
• No land transfer tax
• No entries in the land register
• Simpler communication with authorities

Setting up a foundation can already be covered with 12,000–15,000 euros. When transferring a medium-sized company, there is no upper limit to the costs — fees of 150,000 euros+ are realistic.

Not every advisor is equally qualified

Setting up a foundation is a one-time and irreversible process. Choosing the wrong advisor here can cost you for decades. A typical negative example: A donor with 8 million euros in real estate assets is advised by a generalist, overlooks the land transfer tax trap, and ends up paying 320,000 euros more than necessary.

Check

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