how it works in the u.s. and why there is so little in germany
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How it works in the U.S. and How it works in the U.S. and why there is so little in why there is so little in
GermanyGermany
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OverviewOverview
I. The German Law Of Succession1. Basic Principles2. Example Case
II. Estate Planning1. Statistics2. Why is there so little estate planning in Germany - Ideas3. Analysis
III. Outlook
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German German LawLaw
Basic Principles in German Law of succession
• Testamentary freedom• Estate belongs to the family• Universal succession• Forms of a Will
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TestamentaTestamentary freedomry 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
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Family Family EstateEstate
• 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
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Universal Universal SuccessionSuccession
• Estate goes to beneficiary as a whole including debts
– If there are more they own it together
– No act of conferring necessary
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Forms of Forms of WillWill
• Handwritten will• Handwritten mutual will• Notary public will• Notary public mutual will• Contract
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Sample Sample Case 1Case 1
Father
Mother
Child 1
Child 2
Child 3
Grand-child 1
Grand-child 2
Grand-child 3
Grandfather
Grandmother
1/2
1/6
1/6
1/6
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Sample Sample Case 2Case 2
Father
Mother
Child 1
Child 2
Child 3
Grand-child 1
Grand-child 2
Grand-child 3
Grandfather
Grandmother
1/2
1/6
1/6
1/6
1/12
1/12
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Sample Sample Case 3Case 3
Father
Mother
Child 1
Child 2
Child 3
Grand-child 1
Grand-child 2
Grand-child 3
Grandfather
Grandmother
Mutual Will
1/1
1/12
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ContentContent
I. The German Law Of Succession1. Basic Principles2. Example Case
II. Estate Planning1. Statistics2. Why is there so little estate planning in Germany - Ideas3. Analysis
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Estate Estate Planning Planning StatisticsStatistics
29,1
69,2
Yes
No
Have you got a will or a succession contract yet?all people ages 18 +
57,2
42,7
Yes
No
people ages 60 +
44 55 55 65 75 71 85
50 - 5455 - 5960 - 6465 - 6970 - 7475 - 80 80 +
USA: people ages 50 +
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Estate Estate Planning Planning StatisticsStatistics
How did the testator state his will?
40,84%
14,38%
24,18%
16,25%4,08%
handwritten
h.w. mutual
n.p. mutual
notary public
contract
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Estate Estate Planning Planning StatisticsStatistics
Did anybody help you with the will?
32,30%
18,00%
15,50%
11,50%
28,00%
notary
public
w/ sample
friend
attorney
w/o help
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Why so Why so little? - Ideaslittle? - 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
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AnalysisAnalysis
• 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
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AnalysisAnalysis
• 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 marriagecontract)
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AnalysisAnalysis
• 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 planningcan be an effective option !
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AnalysisAnalysis
• 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
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AnalysisAnalysis
• 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
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AnalysisAnalysis
• 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
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ContentContent
I. The German Law Of Succession1. Basic Principles2. Example Case
II. Estate Planning1. Statistics2. Why is there so little estate planning in Germany - Ideas3. Analysis
III. Outlook
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„Estate Planning“ getsmore known
There are „Estate Planners“ out there
talking about it
Universities start offering „Estate Planning“ as a Subject
OutlookOutlook
People become awareof „Estate Planning“
Demand increases
More Universities offer „Estate Planning“ as a Subject
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QuestionsQuestions
?
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Thank You !