• Germany
• Switzerland
• Italy

Germany: What is subject to inheritance tax or gift tax?

The legal basis is the German Inheritance and Gift Tax Act dated 27.02.1997 (ErbStG). The taxation is linked to the enrichment of the acquirer, which is why it is described as inheritance tax. According to § 1 ErbStG, the following are subject to inheritance tax or gift tax:

• Inherited acquisitions 
• Inter vivos gifts
• Assets of a family foundation within a time period of 30 years
• Specific-purpose transfers

We would be pleased to provide you with a short overview of inheritance tax and gift tax.

1. Tax liability
2. Tax calculations
3. Our consulting services

1. Tax liability

As with income tax and corporation tax, a distinction is also made between unrestricted and limited tax liability in respect of inheritance tax and gift tax. A specific feature of inheritance tax and gift tax law is that both the status of the deceased (donor) and the heir (donee) must be observed.

a) Personal unlimited tax liability

In accordance with § 2 para. 1, clause 1, no. 1 ErbStG, a tax liability arises if the deceased/donor or acquirer is a resident of Germany at the time of death or execution of the donation. Residents are deemed to be people who have a registered office or domicile in Germany, or are habitually resident in Germany, as well as German nationals who have spent less than five years abroad. On the basis of the principle of universal assets, all assets are subject to German inheritance and gift tax if the deceased/donor is a resident. If it is only the acquirer who is a resident of Germany, they are only subject to the part of the German tax attributable to them. In the case of unrestricted tax liability, §§ 16 and 17 ErbStG (tax allowances) and § 21 ErbStG (tax credits) apply.

b) Limited tax liability

Limited tax liability in accordance with § 2, para 1, no. 3 ErbStG occurs when neither the deceased/donor, nor the acquirer, are residents at the time at which the tax liability arises, but the transfer of assets concerns certain domestic assets. The domestic assets in question are listed in full in § 121 BewG, and these include domestic agricultural and forestry assets, real estate holdings, or business assets. Only the relevant domestic assets are then subject to German tax; an allowance of €2,000.00 in accordance with § 16 para. 2 ErbStG is granted. There are special circumstances for citizens of the EU and of the EEA. In certain cases, it may be beneficial to submit an application to impose unlimited tax liability in accordance with § 2 para 3 ErbStG. Tax allowances as per §§ 16 and 17 ErbStG can then be granted, as is the case with unrestricted tax liability, and it is possible to recognise any foreign inheritance or gift tax that has already been paid pursuant to § 21 ErbStG. Furthermore, the provisions of § 4 AStG stipulates that an extended limited tax liability applies within a period of five to ten years following a person’s move to a low tax area.

2. Tax calculations

Tax is generally calculated using the normal (market) value of the transferred assets. Various special provisions (e.g. for real estate holdings) are used. After the deduction of any tax allowances and exemptions, you can determine the taxable earnings. Based on the personal relationship between the deceased/donor and the acquirer, one of three tax brackets will then be applied; the tax rate can then be determined by reference to the amount of the earnings.

a) Tax exemptions

In principle, the entire estate is subject to inheritance and gift tax. Various tax exemptions are provided for in §§ 13 – 13c ErbStG (e.g. household goods or similar up to a certain amount). A property used by the deceased for their own residential purposes is tax free, pursuant to § 13, para 1, no. 4c ErbStG, if the property is then also used by the children of the deceased for their own residential purposes. It should be noted that there are special treatments for agricultural and forestry assets, as well as business assets.

b) Tax brackets

Based on the degree of relationship between the deceased/donor and the acquirer, the following tax brackets are determined:

Tax bracket I: spouse, life partner, children and stepchildren, descendants of children and stepchildren, parents and ancestors at the time of death

Tax bracket II: parents and ancestors, insofar as they do not fall under tax bracket I, siblings, first-degree descendants of siblings, step-parents, children-in-law, mother and father in-laws, divorced spouses and former life partners

Tax bracket III: all other acquirers

c) Tax allowances

Pursuant to § 16 ErbStG. the following are granted an exemption:

• Spouses and life partners: €500,000.00
• Children in tax bracket I and children of deceased children: €400,000.00 
• Grandchildren: €200,000.00 
• Other people in tax bracket I: €100,000.00 
• People in tax bracket II: €20,000.00 
• People in tax bracket III: €20,000.00

In the event of death, a surviving spouse is entitled to a non-taxable allowance on benefits (Versorgungsfreibetrag) pursuant to § 17, para. 1 ErbStG in the amount of €256,000.00, while surviving children, depending on their age, receive between €52,000.00 and €10,300.00 (§ 17 para. 2 ErbStG).

d) Tax rates

On the basis of the tax brackets and the amount of the taxable earnings, a certain percentage of the earnings will be charged according to § 19, para 1 ErbStG. This varies from 7% up to 50%. In relation to tax bracket I, a tax rate of 7% is used for up to €75,000.00; for taxable earnings of more than €26 million, the tax rate is 30%. From the outset, people falling under tax bracket III are subject to a tax rate of 30%, which rises to 50% from €13 million.

3. Our consulting services

Inheritance tax and gift tax can mean having to sensitively intervene in family assets. Our expert lawyers and tax advisors at Viehbacher law firm will not only complete inheritance tax and gift tax declarations, but will advise you in advance and in the long-term with regard to the optimum structure of asset transfers. Do you have any questions? We look forward to hearing from you!

Switzerland

Our information in the English language concerning preparation of capital transfer tax returns in Switzerland is currently still being developed. We kindly ask for your understanding. Therefore, please do not hesitate to contact us directly with your queries and concerns. For over ten years now, we have been preparing capital transfer tax returns for clients in three different countries. With us you are always competently advised and well represented. We look forward to receiving your message or call!

Italy

Our information in the English language concerning preparation of capital transfer tax returns in Italy is currently still being developed. We kindly ask for your understanding. Therefore, please do not hesitate to contact us directly with your queries and concerns. For over ten years now, we have been preparing capital transfer tax returns for clients in three different countries. With us you are always competently advised and well represented. We look forward to receiving your message or call!

Personal tax planning

Personal tax planning can be useful in the private sector, particularly for any pending investments or investment decisions, and when considering how these might affect your life situation. If you have a great number of personal assets, it is worth assessing the correct distribution of the assets and the right legal form. Optimising the structure could result in tax advantages.

Personal tax planning may cover a number of topics including:

Analysis of property assets, including the depreciable amount and tax burden. It might be advantageous in this instance to sell a part of the assets to a domestic or foreign individual or corporation, as this allows the depreciable amount to increase again and could have advantages, among others, such as reducing the tax burden on the surpluses 

• Advice on property investments to take advantage of tax opportunities 
• Advice on capital investments with respect to the tax component 
• Choosing the optimum income tax category for spouses (in Germany) 
• Choosing between separate and joint investment (in Germany) 
• Advice on insurance policies for pensions, including optimal deductibility for tax purposes 
• In instances of greater private wealth and assets, establishing a private-benefit foundation

All life planning factors are considered

Personal tax planning naturally requires all life factors to be taken into account. It is therefore worth questioning many areas and evaluating them:

• Where are you in life?
• What are your personal goals?
• What are your professional goals?
• What is your pension provision?
• What is your asset structure?
• Are your assets restricted domestically or are they structured internationally? 
• Where would you like to see a change?
• Do you have sufficient protection for your family?

The optimum structure requires intensive joint cooperation, since the private areas of your life play a major role. When having these discussions with you, we exercise the utmost discretion and sensitivity. By having open and trusting discussions, we can take many steps to help you achieve a better life structure, assets and, importantly, better personal tax planning outcomes.

Our tax experts at the Viehbacher law firm will gladly answer your questions and can help you in optimising your assets and income. Whether you’re in Munich, Vienna, Triesen, Zurich or Brixen, we look forward to hearing from you!

• Germany
• Austria
• Liechtenstein
• Switzerland
• Italy

Laws - standards - directives in Germany

In principle, German income tax is governed by the German Income Tax Act (EStG). However, many details and directives cannot be found in the German Income Tax Act, but are instead in the tax regulations and tax waivers of the tax office. In addition, the case-law of the Bundesfinanzhof (Federal Finance Court) must be repeatedly consulted and followed. For the taxpayer, this deluge of regulations represents an almost impenetrable thicket. The expert advice of tax accountants can pay off, even with the seemingly simplest income tax return. A citizen domiciled or ordinarily resident in Germany is subject to unlimited income tax liability in accordance with the worldwide income basis, i.e. taking into account all of their income globally. Bilateral regulations in double taxation agreements can assign individual income either to the source country or the country of residence. Foreigners may be liable for limited tax liability in respect of domestic income. For EU citizens, there are further specific arrangements.

Construction of the German Income Tax Act

The German Income Tax Act recognises the following types of income:

• Agricultural and forestry §§ 13-14 EStG 
• Business operations §§ 15-17 EStG 
• Self-employment § 18 EStG 
• Work under an employment contract § 19 EStG 
• Capital assets § 20 EStG
• Rental and leasing § 21 EStG 
• Other income §§ 22-23 EStG

The amount of the respective income is determined according to the earnings basis method (balance sheet), or either as an excess of income over expenditure, or an excess of income over advertising costs. After determining the amount of income, you can offset losses (sometimes limited) and deduct a variety of special allowances, pension expenses and extraordinary burdens. There are also arrangements to note with regard to children, household services, tradesman services, etc. The taxable income on the income tax return is calculated from the total of all income and once all deductions and allowances etc. have been taken into account.

The tax rate

No income tax is due on taxable income of up to €8,652.00 (basic allowance). At €8,653.00 taxation is levied at an initial tax rate of 14%. As the level of income increases, so does the tax rate (progressive) until it reaches the top tax rate of 42% with an income of €53,665.00. A surcharge of 3% is also added when the taxable income reaches €254,447.00 (so-called wealth tax). The amounts above pertain to individual tax assessments. For spouses in Germany, assessment of the tax is normally made on a joint basis, and exemptions and limits are doubled.

Help with your income tax return

The tax accountants and staff at Viehbacher law firm not only have an outstanding knowledge about profit calculation on all types of income as well as other areas of income tax law, but are also proficient in special provisions and case-law. We believe that, as a taxpayer, you have the right to make use of all legal means to reduce your tax burden. We will help you with this and look forward to hearing from you!

Laws - standards - directives in Austria

The income tax return in Austria is governed by the Austrian Income Tax Act (EStG). In individual cases, the tax regulations and tax waivers of the tax office are also taken into account. Shortcomings in interpretation are closed by case-law. Income tax is levied on the income of all natural persons who are ordinarily resident or have their domicile in Austria. Bilateral regulations in double taxation agreements can assign individual income either to the source country or the country of residence.

Construction of the Austrian Income Tax Act (EStG)

§ 2, para 3 EStG recognises the following types of income:

• Income from agriculture and forestry (§ 21), 
• Income from self-employed work (§ 22), 
• Income from business operations (§ 23), 
• Income from work under an employment contract (§ 25) 
• Income from capital assets (§ 27; such as savings certificates or savings books and securities. This income is usually taxed together with capital gains tax as final taxation and does not need to be recorded in the tax return) 
• Income from rental and leasing (§ 28) 
• Other income within the meaning of § 29 (remuneration in respect of services, function fees, or speculations that were not already covered by the first six types of income).

The tax rate

No income tax is due on taxable income of up to €11,000.00. Income between €11,001 and €18,000 is taxed at 25%. A total of seven tax brackets exist for income tax, rising to 55% (for income exceeding €1,000,000). There is no provision for the joint tax assessment of spouses in Austria; the principle of individual taxation applies.

Help with your income tax return

Types of profit calculation on all types of income and other areas of income tax, in addition to expertise in special provisions and case-law, all form part of the specialist knowledge of our tax accountants and staff at the Viehbacher law firm. As a taxpayer, you have the right to use all legal means to reduce your tax burden – we can provide you with competent help to ensure you benefit the most from the situation. We look forward to hearing from you!

Laws - standards - directives in Liechtenstein

A citizen domiciled or ordinarily resident in Liechtenstein is subject to unlimited income tax liability in accordance with the worldwide income basis, i.e. taking into account all of their income globally. Individual income can be assigned through bilateral regulations in double taxation agreements to either the source country or the country of residence. Foreigners may be liable for limited tax liability in respect of domestic income and assets. For cross-border workers, there are further specific arrangements.

Assets and liabilities must be recorded at market value. A notional so-called "nominal income” is currently calculated at 4% of the net assets, which is taxed as earnings.

In addition to this nominal income, Liechtenstein tax law recognises the following types of income, among others:

• Income from self-employed or salaried employment 
• Compensation for corporate bodies 
• Pensions and capital benefits
• Insurance benefits
• Maintenance expenses, etc.

Examples of non-taxable items, however, are:

• Income from assets on which wealth tax (nominal income) is paid, such as dividends, interest received, lease contracts for private property, etc.
• Earnings from permanent establishments located abroad
• One-time asset gains in the form of inheritance and gifts 
• Capital gains from the sale of components of movable and immovable private assets, etc.

In addition to tax law, an important basis for taxation is the administrative regulations (notices and directives), in which the tax department specifies individual aspects of tax liability and tax assessment. In addition, the case-law of the Liechtenstein State Court must be repeatedly consulted and followed.

Even if you have the seemingly simplest income tax return, taking the expert advice of tax accountants can pay off.

Help with your income tax return

After determining the amount of income, you can offset losses (sometimes limited) and tax deductibility can apply to a multitude of special allowances, pension expenses and extraordinary burdens. There are also arrangements to note with regard to children, donations, etc. The taxable income is calculated from the total of all income and once all deductions and allowances etc. have been taken into account.

The consultants at the Viehbacher law firm not only have outstanding knowledge of the specific aspects and details of income tax law, but are also experts in special provisions and the relevant case-law.

As a taxpayer you have the right to use all legal means to reduce your tax burden. Our Liechtenstein tax experts will help you and happily advise you in this regard. We look forward to hearing from you!

Laws - standards - directives in Switzerland

In Switzerland, taxation of income basically takes place on three levels. The federal authorities levy direct federal tax, while the cantons and local authorities levy canton tax or municipal tax. The legal basis for direct federal taxation is the Federal Act on Direct Federal Taxation (DBG). Cantons and the local authorities rely on respective cantonal and local fiscal regulations in assessing tax. The many circulars, newsletters, leaflets and guidance that the tax administration publishes to specify certain aspects of tax liability and tax assessment play an important role. In addition, the case-law of the Federal Administrative Court and the cantonal courts must be repeatedly consulted and followed.

For the taxpayer, this deluge of regulations represents an almost impenetrable thicket when trying to complete an income tax return. The expert advice of tax accountants can pay off, even with the seemingly simplest income tax return. A citizen residing or ordinarily resident in Switzerland is subject to unlimited income tax liability in accordance with the worldwide income basis, i.e. taking into account all of their income globally. Bilateral regulations in double taxation agreements can assign individual income either to the source country or the country of residence. Foreigners may be liable for limited tax liability in respect of domestic income. For cross-border workers and foreigners with identity document B for foreign nationals, there are further specific arrangements.

1. Direct Federal taxation
2. Cantonal and municipal taxes
3. Help with your income tax return

1. Direct Federal taxation

Direct Federal taxation is an income tax and mainly relates to the following types of income:

• Taxation of income for natural persons that are either employed nor self-employed (Article 16 et. seq. DBG)
• Taxation of profit with regard to legal and accounting professions (Article 57 et. seq. DBG)
• Withholding tax in the event of foreign taxable persons and certain other groups of taxable persons (Article 83 et. seq. DBG)

In terms of taxation methodology of legal persons, tax law differentiates between companies or corporations (AG, GmbH), cooperative societies and other corporations such as associations or foundations.

2. Cantonal and municipal taxes

Each canton levies their own income and assets tax for natural persons, or profit tax and tax on capital with regard to corporations. The municipal tax is calculated as a percentage of the cantonal tax. The tax rates in the different cantons for natural and legal persons, as well as the so-called “taxation coefficient" of each individual municipality, can vary widely from one place to another. These are important factors when choosing a place of residence for your family or a head office for your business. There may even be up to double-digit differences in the total tax burden in municipalities that are next to each other. There is often strong tax competition between municipalities and cantons.

3. Help with your income tax return

After determining the amount of income, you can offset losses (sometimes limited) and deduct a variety of special allowances, pension expenses and extraordinary burdens. There are also arrangements to note with regard to children, household services, etc. The taxable income is calculated from the total of all income and once all deductions and allowances etc. have been taken into account.

The consultants and staff at Viehbacher law firm not only have an outstanding knowledge about types of profit calculation on all types of income as well as other areas of income tax, but are also proficient in special provisions and case-law. We believe that, as a taxpayer, you have the right to make use of all legal means to reduce your tax burden. Our Swiss tax accountants will help you and happily advise you in this regard – we look forward to hearing from you!

Italy

Our information in the English language concerning preparation of income tax returns in Italy is currently still being developed. We kindly ask for your understanding. Therefore, please do not hesitate to contact us directly with your queries and concerns. For over ten years now, we have been preparing income tax returns for clients in five different countries. With us you are always competently advised and well represented. We look forward to receiving your message or call!

• Germany
• Austria
• Liechtenstein
• Switzerland
• Italy

Germany

The Swiss theologian Joseph Vital Kopp said...

... that, when a person inherits, owners of whole rows of houses will still argue over a cup. In many cases, heirs and relatives are unable to avoid a dispute, whether they like itor not. Would you like to make an inheritance claim or dispute an inheritance? Our inheritance and estate litigation experts will provide everything you need.

1. Status of the heirs
2. Disputes in the community of heirs
3. Disputes over the estate
4. Sale of a portion of inheritance
5. Apportionment and division of the estate
6. Estate distribution

1. Status of the heirs

In many cases it is actually unclear who is the rightful beneficiary. There are many different reasons for this. The will may be invalid or allow multiple interpretations of what is written. Equally, the status of heirship can be complicated by family relationships, such as patchwork families, children born out of wedlock or adopted children. In addition, the existence of a testamentary contract can also bring about specific circumstances. What is initially necessary is an overall view of the parties and an analysis of their specific positions within the succession.

2. Disputes in the community of heirs

§ 1922 of the German Civil Code (BGB) states that the assets of the deceased form the inheritance. Where the law of succession is applied, assets are transferred jointly by way of a so-called universal succession to the heir or heirs. In particular, where there are several beneficiaries, the seeds of conflict have often already been sown. This is the so-called community of heirs, where all persons are equally entitled with regard to the estate. Disposal of the accounts needs to be undertaken, the funeral organised and, at the same time, any transactions or activities must be continued. Succession brings together people from very different walks of life into one legal community, but this does not mean that a trusting and human community is automatically created. In fact, it is quite the opposite. In this instance, our will dispute lawyers – who are both professional experts in the field of inheritance disputes and well-versed in tact and discretion – are asked to lead individual parties of the community of heirs through this difficult time, while also making any necessary decisions and securely documenting them.

3. Disputes over the estate

In addition to disputes within a community of heirs, it is possible to dispute the estate itself. What does the estate of the deceased actually consist of? Who has access to the house or to the company? How can the estate be secured, what repairs need to be made at this time? It also quite often happens that heirs do not agree with the testamentary dispositions of the testator. This is especially true if they relate specifically to very valuable assets in the estate. In such situations, it is crucial that you have the support of a consultant who is not personally involved, in order that you can achieve the best solution. Our lawyers specialise in solving disputes in your favour. This can take place out of court or through a trial. When it comes to the crunch, our lawyers will evaluate the chances of success of the claim and the estimated costs.

4. Sale of a portion of inheritance

In order to exclude or end a dispute over inheritance, an inheritance sale could be the best option. With the sale of an individual portion of the estate, the individual status of heirship is ended. The purchase is carried out in accordance with the general provisions of §§ 433 of the German Civil Code (BGB); however, there is a specificity when it comes to succession law: in accordance with § 2034 para 1 BGB, heirs have the right of first refusal. According to the case-law of the Federal Court of Justice, this right of first refusal is common to all heirs. In the event of the sale of a portion of inheritance, this agreement must be signed before a notary public. This regulation applies in general and not only to the sale of property. With the completion of the sale, the status of heirship for these co-heirs is not ended, but is formally maintained. Our lawyers are specialised in tax law and can provide advice regarding the details of an inheritance sale and the associated tax implications.

5. Apportionment and distribution of the estate

A community of heirs is legally created for the distribution of the estate, as follows from the regulatory content of § 2032 BGB. Distribution of the estate among the community of heirs often goes hand-in-hand with large-scale disputes. In this instance, distribution means that the assets of a majority of the community of heirs’ members are distributed, and the community or company is then dissolved. It is also legally determined in § 2042 BGB that every co-heir may, in principle, request that distribution take place at any time. The distribution of the community of heirs takes place according to § 705 BGB, natural distribution. In factual terms, this means that each co-heir, with the consent of the others, can choose items from the estate themselves until the estate is divided up. In reality, this factual distribution does not often work in practice. It becomes even more difficult to distribute the estate if the childhood home or company needs to be sold. The Ultima Ratio can, however, be a claim for distribution of the estate, through which a co-heir may force the distribution by means of legal action. This approach necessarily involves additional costs and our experts will advise you on whether this is the right option for your personal situation.

6. Estate apportionment

In addition to the distribution of the estate or the sale of shares in the inheritance, there is another way to dissolve a community of heirs – apportionment. This course of action is not explicitly regulated in law in the succession rules, but has developed from the case-law of the supreme court from the appropriate application of §§ 1935, 2094, 2095, and 738 BGB. In this way, a co-heir can withdraw from the community of heirs and his share is used to increase the share of the other heirs in equal proportions. The co-heir who is is withdrawing is then entitled to compensation from the other members of the community of heirs, § 738, para 1 BGB. The parties can jointly set the amount of this compensation and it is possible for two or more people in a community of heirs to do this. The great advantage for the parties concerned is that the inheritance dispute is settled out of court.

Contact

As experts in consultation and representation in inheritance and succession disputes, we are ready to work with you. Get in touch!

Austria

There is barely any other legal event that has such a high conflict potential as succession.

The parties assert their claims with particular resolve and quite often a substantial dispute can arise over items of little value. Whether this is intentional or not, in every case a legally clean and rapid solution is beneficial in the interests of those involved. Our experts on inheritance and succession disputes can draw up appropriate and well thought out solutions for you that will contribute to the optimum balance of all interests.

1. Status of the heirs
2. Disputes in the community of heirs
3. Disputes over the estate
4. Sale of a portion of inheritance
5. Distribution of inheritance

1. Status of the heirs

The question of who is the overall rightful heir may lead to some initial clashes. This might be because the will is invalid or inconclusive, or because family relationships are complicated, such as with patchwork families, children born out of wedlock or adopted children. Sometimes, even an inheritance contract can raise questions that require clarification. Our will dispute lawyers can assist with an overall view of all parties and can analyse the respective positions within the succession.

2. Disputes in the community of heirs

In Austria, § 531 AGBG (Austrian Civil Code) defines the "embodiment of the rights and liabilities of a deceased" as his estate. Under current law, this estate can only be transferred to the so-called heir through probate, which is an individual sovereign act on completion of the probate proceedings and the submission of a declaration of inheritance regarding the property of the beneficiary. The Act therefore also regulates inheritance rights, universal succession and the corresponding distribution of the estate. However, ambiguities can arise, such as from the necessary disposal of accounts, the organisation of the funeral or the need to continue activities or business. All of these questions must be resolved by a group of randomly connected, sometimes very different personalities. This is where we recommend consulting lawyers who, in addition to technical skills, can also employ tact and discretion in directing the community of heirs to achieve the best balance of interests and ideal solutions.

3. Disputes over the estate

A dispute may also give rise to the question of what actually falls under the estate. In addition, questions regarding who has access to the house or the company, or who is responsible for protecting the estate, can often be unclear. It may also be the case that the heirs do not agree with the final dispositions of the testator, particularly in respect of high-value items in the estate. In these cases, a neutral advisor is the best option. They can analyse the chance of success and the cost of such a dispute, and can resolve them in the best interest of the parties, either outside of court or through the judicial process. Our will dispute lawyers have extensive experience and expertise in this field.

4. Sale of a portion of inheritance

One of the simplest solutions for an inheritance dispute is the sale of the share in the inheritance in accordance with § 828 ABGB. Under Austrian law, the community of heirs are co-owners with fractional shares (§ 825 et seq.) ABGB), so that each co-heir is a co-owner of the estate as per his inheritance share. Therefore, the authority to sell his share in accordance with § 829, 361 ABGB does not refer to the share in the inheritance, but the sharing co-ownership of the individual object. The seller therefore terminates his position as heir and withdraws from the conflict. Our lawyers specialised in tax and inheritance law can provide advice regarding the details of an inheritance sale and the associated tax implications.

5. Distribution of inheritance

The distribution of the estate among the members of the community of heirs requires the consent of all members concerned for every single item and can therefore lead to significant differences of opinion. By law, each co-heir can request that distribution takes place. In practice, this factual distribution does not often work. It becomes even more difficult to distribute the estate if the childhood home or company needs to be sold. The Ultima Ratio can, however, be a claim for distribution of the estate, through which a co-heir may force the distribution by means of legal action. This approach necessarily involves additional costs and our experts from the Viehbach law firm will advise you on whether this is the right option for your personal situation.

Contact

As experts in consultation and representation in inheritance and succession disputes, we are ready to work with you in Austria. Get in touch with our law firm in Vienna! 

Liechtenstein

When it comes to inheritance, there are many tasks for the heirs to carry out. In addition to registering the death, there are also legal and practical challenges. Especially in issues of the estate and inheritance, few people think rationally. Because of the emotional involvement of those concerned, misunderstandings and disagreements can lead to significant conflict.

Our inheritance & probate law lawyers can advise you, regardless of whether you want to assert a claim for inheritance or you have become involved in an inheritance dispute. Due to the cross-border nature of the Viehbacher law firm, we can provide you with comprehensive and competent advice, even if the succession has an international element.

1. The probate process
2. Status of the heirs
3. Disputes in the community of heirs
4. Disputes over the estate
5. Apportionment and division of the estate
6. International matters

1. The probate process

In Germany (as an example) inheritance transfers to the heirs upon the death of the testator, whereas in the Principality of Liechtenstein a judicial probate process is carried out, pursuant to article 143 et seq. of the Non-Contentious Proceedings Act (AussStrG).

The probate process is divided into the preliminary proceedings, article 143 to article 155 AussStrG, and the probate procedure itself, article 166 to article 181 AussStrG. During the preliminary proceedings, firstly the death is officially recorded, inventories of or investigations on the estate and potential heirs are carried out, and the succession is secured.

Following the preliminary proceedings, the probate process can then be undertaken. In accordance with article 153 AussStrG, this is waived if the estate has no intrinsic value or does not exceed the value of CHF 8,000.00. However, upon the application of any interested party, the probate process can be carried out.

If there is intrinsic value to the estate, the probate process will be undertaken. Within this context, if declarations of inheritance are submitted, it is also conceivable for there to be discussions about the respective inheritance law or the determination of the inheritance law. Only when all of the issues have been resolved can there be a so-called heir, pursuant to article 177 AussStrG.

While in other jurisdictions certificates of inheritance need to be granted for proof of status of heirship, this is decided in Lichtenstein by means of an order. This is, in particular, because the probate proceedings constitute a judicial proceeding.

2. Status of the heirs

The starting point for validation of an inheritance claim is an effective status of heirship. This is checked and determined by the Princely Court of Justice [Fürstliches Landgericht] within the framework of probate proceedings. Irrespective of whether you are making or defending inheritance claims, there must first be a clarification of who has become the rightful heir. What appears to be initially straightforward, can in fact be very difficult. The will of the deceased may be ineffective or allow for multiple interpretations of the actual last will. The transformation of the "family" institution, whether this refers to patchwork families, born out of wedlock or adoptive children, can complicate any determination of the status of heirship. In addition, the testator may have provided for specific circumstances through a contract of inheritance. It is essential under these circumstances to have an overall view of the people and parties involved. Only once this has been established can your definite position within the succession be determined and dealt with accordingly. Because these are, after all, legal proceedings, it is strongly recommended that you receive expert advice on the approach to be taken.

3. Disputes in the community of heirs

Pursuant to § 531 AGBG (Austrian Civil Code) the estate is defined as the "embodiment of the rights and liabilities of a deceased". The right to take the entire estate or possession of a particular part thereof is named as the law of succession in § 532 ABGB. In accordance with § 532 paragraph 3 ABGB, this becomes the inheritance belonging to those who have the right to inherit. In particular where there are several beneficiaries that form a so-called community of heirs, the seeds of conflict have often already been sown. There is an inevitable passage of time between the time of death and the granting of probate, in which the estate is legally secured. Access is not immediately given to the beneficiaries, yet there may be certain necessary financial transactions such as funeral costs, which are initially borne by the beneficiaries. The succession process can bring together people with different ideas and views. In addition, although in a best-case scenario the community of heirs trusts each other and acts in the best interests of their fellow members, in reality this seldom happens. This is where lawyers are asked to be consultants, as they have both the empathetic skills and the technical expertise in the field of inheritance law to guide the various members of a community of heirs safely through the emotionally difficult time they face. Our experts at the Viehbacher law firm can provide you with comprehensive advice so that you can face any decisions sensibly and have them securely documented.

4. Disputes over the estate

Disputes within the community of heirs are often based on a dispute over the succession or similar. In this way, any person is entitled under article 165 AussStrG to request that an inventory is drawn up. In accordance with article 166 AussStrG, the inventory is a complete record of the estate, thus including all physical and intangible assets of the deceased along with their value at the point of death. Although article 167 AussStrG lays down some valuation principles, these do not provide the necessary clarity. Quite often members of a community of heirs will place too high a value on objects, as they combine both an ideal and material value.

In such situations, it is important to consult a neutral advisor. Good solutions can be drawn up when emotion plays no role and factual issues are at the heart of the matter. Our experts specialise in solving disputes in your favour out of court. Should a settlement out of court not be possible, then naturally our lawyers will also be by your side through any court proceedings.

5. Apportionment and distribution of the estate

The nature of things is that a community of heirs is only created for a limited period of time before apportionment and distribution must take place. Because this is linked to the distribution of assets, members of the community of heirs quite often end up involved in major disputes. Thus, the factual division of the estate is quite often not possible in practice and cannot be implemented. It becomes even more difficult to distribute the estate when, under certain circumstances, the childhood home or family business needs to be sold in order for the inheritance to be distributed. If there is no other way forward, a distribution of the estate can be brought about under the context of legal proceedings. It is evident, however, that such an approach will also attract significant additional costs. Our experts at Viehbacher lawyers and tax consultants will gladly explain the advantages and disadvantages of such a course of action to you.

6. International matters

One peculiarity stems from the small size of the Principality of Liechtenstein, where Liechtenstein citizens will live and work outside of the Principality. Likewise, it is also conceivable that a foreigner might die in the Principality of Liechtenstein. In all these cases, the question of relevant law is of importance. According to article 29 para. 1 of the International Private Law Act (IPRG) the nationality of the deceased must first be considered. However, the Princely Court of Justice is responsible for the probate process, thus insofar as no other contrary express regulation is in the will or testamentary contract, Liechtenstein law be applied. Due to the EU inheritance law, succession and the law of succession to be applied is determined according to the law of the country in which the deceased had their last habitual residence. However, the testator can also choose the applicable law. This means that, in the event that a person from Liechtenstein dies, and this person was last resident in Italy, then Italian law will be applied in the absence of a contrary provision. The Viehbacher law firm is internationally oriented and is represented in all relevant jurisdictions: Europe, Switzerland and Liechtenstein. Even if there are cross-border inheritance disputes, you will also be able to benefit from our knowledge and expertise.

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Do you have any more questions? Our experts in Liechtenstein are looking forward to hearing from you!

Switzerland

The Swiss theologian Joseph Vital Kopp said that, when a person inherits, owners of whole rows of houses will still argue over a cup. In many cases, heirs and relatives are unable to avoid a dispute – whether they like it or not. Would you like to make an inheritance claim or dispute an inheritance? Our will dispute lawyers in Switzerland will provide everything you need.

1. Status of the heirs
2. Disputes in the community of heirs
3. Disputes over the estate
4. Sale of a portion of inheritance
5. Apportionment and division of the estate
6. Testamentary contracts and renunciation of inheritance

1. Status of the heirs

In many cases it is actually unclear who is the rightful beneficiary. There are many different reasons for this. The testamentary disposition may be invalid or allow multiple interpretations of what is written. Equally, the status of heirship can be complicated by family relationships, such as patchwork families, children born out of wedlock or adopted children. In addition, the existence of a testamentary contract can also give rise to specific circumstances. What is initially necessary is an overall view of the parties and an analysis of their specific positions within the succession.

2. Disputes in the community of heirs

Article 560 et seq. of the Swiss Civil Code (ZGB) stipulates that, subject to statutory exceptions, any claims, property, limited material rights and property of the testator is transferred to the heirs. Where the law of succession is applied, assets are transferred jointly by way of a so-called universal succession to the heir or heirs. In particular, where there are several beneficiaries, the seeds of conflict can often already be sown. This is the so-called community of heirs, where all persons are equally entitled with regard to the estate. Disposal of the accounts needs to be undertaken, the funeral organised and, at the same time, any transactions or activities must be carried out. Succession brings together people from very different walks of life into one legal community, but this does not mean a trusting and human community is automatically created. In fact, it is quite the opposite. In this instance our lawyers – who are both professional experts in the field of inheritance disputes and well-versed in tact and discretion – are asked to lead individual parties of the community of heirs through this difficult time, while also making any necessary decisions and securely documenting them.

3. Disputes over the estate

In addition to disputes within a community of heirs, it is possible to dispute the estate itself. What does the estate of the deceased actually consist of? Who has access to the house or to the company? How can the estate be secured, what repairs need to be made at this time? It also quite often happens that heirs do not agree with the final dispositions of the testator. This is especially true if they relate specifically to very valuable assets in the estate. In such situations, it is crucial that you have the support of a consultant who is not personally involved, in order that you can achieve the best solution. Our lawyers specialise in solving disputes in your favour. This can take place out of court or through an action claiming the rights of an heir. When it comes to the crunch, our lawyers will evaluate the chances of success of the claim and the estimated costs.

4. Sale of a portion of the inheritance

In order to exclude or end a dispute over inheritance, the sale of inheritance shares could be the best option. With the sale of an individual portion of the estate to a co-heir or non-beneficiary, the heir renounces his claim in accordance with article 635 of the Swiss Civil Code. The purchase is carried out according to the general regulations of the Swiss Code of Obligations; however, the written form is required for the corresponding sale contract. A notarial act is not required according to federal case law, even where freehold land is being sold. With the completion of the sale, the status of heirship for those co-heirs that are making the sale is not ended, but is formally maintained. If a share is sold to a third party, they do not acquire a status of heirship and have no right to participate in the distribution, only a claim on the portion being assigned to them by the beneficiary from the distribution. Our lawyers are specialised in tax law and can provide advice regarding the details of the sale of a portion of inheritance and any associated tax implications.

5. Apportionment and distribution of the estate

A community of heirs is legally created for apportionment and distribution of the estate, as follows from article 602 et seq. of the Swiss Civil Code. Distribution between the community of heirs often goes hand-in-hand with large-scale disputes. In this instance, distribution means the assets of a majority of the community of heirs’ members are distributed, and the community or company is then dissolved. It is also laid down in law in article 602 ZGB that any co-heir may request the distribution of the inheritance and can therefore, in principle, end the community of heirs at any time. The distribution of the community of heirs takes place pursuant to article 610 et seq. ZGB. In factual terms, this means that each co-heir, with the consent of the others, can choose items from the estate themselves until the estate is divided up. In reality, this factual distribution does not often work in practice. It becomes even more difficult to distribute the estate if the childhood home or company needs to be sold. The Ultima Ratio can, however, be a claim for distribution of the estate, through which a co-heir may force the distribution by means of legal action. This approach necessarily involves additional costs and our experts will advise you on whether this is the right option for your personal situation.

6. Testamentary contracts and renunciation of inheritance

In Switzerland, the testator can conclude an inheritance agreement or compensation in lieu of future inheritance with the heir. When distributing the estate, the waiving heir is thus not taken into consideration. There are various ways in which a testator can divide his estate after his death. Our lawyers and tax consultants will be glad to advise you from a taxation point of view on the peculiarities of the Swiss law of succession.

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As Swiss experts in consultation and representation in inheritance and succession disputes, we are ready to work with you. Get in touch! 

Italy

Our information in the English language concerning consultation and representation in inheritance or estate disputes in Italy is currently still being developed. We kindly ask for your understanding. Therefore, please do not hesitate to contact us directly with your queries and concerns. For over ten years now, we have been supporting clients in five different countries with their inheritance or estate disputes. With us you are always competently advised and well represented. We look forward to receiving your message or call!