Inheriting property from abroad can be a stressful and emotional process — especially when different legal systems and tax regulations come into play. For U.S. citizens inheriting property in Germany, understanding both German inheritance law and how it interacts with U.S. regulations is essential to avoid unexpected complications. Whether you’re dealing with a family estate or planning for future generations, finding the best solution for your unique situation requires expert guidance.
At Urban Thier & Federer, P.A., our international legal team specializes in cross-border inheritance matters, offering comprehensive support to clients facing estate issues between the U.S. and Germany.
Understanding German Inheritance Law
German inheritance law operates under the principle of universal succession, meaning that both assets and liabilities automatically transfer to heirs immediately upon death — without the need for formal probate proceedings as commonly required in the U.S. While this process may seem straightforward, heirs must actively reject the inheritance within six weeks of notification (or six months if residing outside of Germany. This step is particularly important if the estate carries significant debts and if the liabilities exceed the assets.
A key regulation governing cross-border inheritances in Germany is the European Succession Regulation (EU Regulation No. 650/2012). This regulation applies to most EU countries and typically dictates that the law of the deceased’s habitual residence will apply to the entire estate — including property in Germany, however, individuals can elect to apply the law of their nationality through a formal declaration in their will.
Tax Implications for U.S. Citizens
One of the most important aspects to consider when inheriting German property is the potential tax burden. Germany imposes inheritance tax (Erbschaftsteuer) on beneficiaries, regardless of their nationality or place of residence. This means that even U.S. citizens inheriting property in Germany may be subject to German inheritance tax.German inheritance tax rates are based on both the value of the inheritance and the relationship between the heir and the deceased.
To prevent double taxation, the Germany-U.S. Estate and Gift Tax Treaty helps coordinate tax obligations between both countries. U.S. citizens may be eligible for tax credits on their U.S. tax return for German inheritance taxes paid. However, navigating the treaty’s provisions and ensuring proper tax filings in both countries often requires legal assistance.
Which Law Applies?
Determining which country’s laws apply to an inheritance is not always straightforward. The habitual residence of the deceased at the time of death is often the deciding factor under German and EU law. However, if the deceased was a U.S. citizen with assets in Germany, the applicable law might differ depending on the estate’s structure and any existing estate planning documents.
In some cases, heirs can choose which law applies — German or U.S. — through a choice of law declaration in the deceased’s will. This decision can have significant implications on the distribution of assets and tax obligations.
The Inheritance Process in Germany
For U.S. citizens inheriting German property, the following steps are typically required:
- Obtaining a Certificate of Inheritance (Erbschein): This official document from a German probate court confirms the heir’s legal right to inherit.
- Paying Inheritance Tax: Tax filings must be made within three months of learning about the inheritance.
- Transferring Property Ownership: The property must be officially registered in the heir’s name with the German land registry (Grundbuchamt).
- Managing or Selling Property: Heirs must decide whether to retain, rent, or sell the inherited property, which may involve further tax and legal considerations.
How Urban Thier & Federer Can Help
At Urban Thier & Federer, we have extensive experience assisting clients with cross-border estate matters between the U.S. and Germany. With offices in both countries, our bilingual legal team can guide you through every stage of the inheritance process, including:
- Obtaining Certificates of Inheritance
- Navigating German inheritance tax filings
- Managing international property transfers
- Advising on estate planning strategies to minimize tax burdens
- Resolving disputes between heirs
Our firm’s deep understanding of both German and U.S. legal systems allows us to offer seamless, comprehensive representation — ensuring that our clients’ rights and financial interests are protected across borders.