Inheritance is a subject that, perhaps more than any other, is shaped by emotion. Yet anyone wishing to preserve wealth across generations, avoid liquidity constraints within a family business and prevent the tax authorities from becoming the unintended principal beneficiary must set emotions aside and confront the underlying tax realities.

Germany is currently experiencing the largest transfer of wealth in its history. A look at the figures demonstrates both the enormous scale of this development and the equally significant risks of failing to plan ahead.

The Facts: The Largest Transfer of Wealth of All Time

Germany is on the brink of an unprecedented wave of wealth transfers. The German Bundesbank and leading economic research institutes estimate that between 2024 and 2034, assets worth up to €4 trillion will change hands through inheritances and lifetime gifts.

• Inheritance and gift tax revenues have reached record levels year after year. Most recently, annual revenue exceeded €9 billion, with the upward trend continuing.
• The real estate challenge: Since the reform of the valuation rules, property is generally assessed by the tax authorities much closer to its market value. At the same time, tax-free allowances have remained unchanged (e.g. €400,000 for children since 2009). The result is clear: today, even an average family home in many metropolitan areas can exceed the available allowances, resulting in substantial inheritance tax liabilities unless planning is undertaken in advance.
• The liquidity risk for family businesses: More than 90% of German businesses are family-owned. Where succession planning is not addressed early enough, businesses may be forced to use operating liquidity to fund inheritance tax liabilities. In the worst case, this can result in a distressed sale or even the break-up of the business.

Why "Waiting" Is the Most Expensive Strategy

German inheritance tax law is highly complex. It contains numerous tax pitfalls, but also offers significant legitimate planning opportunities for those who act proactively rather than reactively. Waiting until an inheritance occurs often means giving away substantial amounts of money unnecessarily. 

Top-level tax advice never considers succession planning in isolation. It is closely linked to business structuring, international residence planning and long-term investment strategy.