Inheriting 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 in Germany, it is essential to understand both German inheritance law and its interplay with U.S. regulations to avoid unexpected complications. Whether dealing with a family estate or estate planning for future generations, the best solution for your individual situation requires expert advice.

At Urban Thier & Federer, PA, is our international legal team specializing in cross-border inheritance matters, offering comprehensive support for clients facing estate issues between the USA and Germany.

German inheritance law is based on the principle of universal succession. This means that assets and debts automatically and immediately pass to the heirs upon death – without the need for a formal probate process as in the United States. Although this process seems straightforward, heirs must actively disclaim the inheritance within six weeks of notification (or more precisely, six months if they reside outside of Germany). This step is particularly important if the estate has significant debts that exceed the assets.

A central regulation for cross-border successions in Germany is the European Succession Regulation (EU Regulation No. 650/2012) . This regulation applies to most EU countries and generally stipulates that the law of the deceased's habitual residence applies to the entire estate, including assets in Germany. However, testators can determine the application of the law of their nationality through a formal declaration in their will.

One of the most important aspects of inheriting real estate in Germany is the potential tax burden. Germany levies inheritance tax on Heirs, regardless of their nationality or place of residence. This means that even U.S. citizens who inherit property in Germany may be subject to German inheritance tax. The amount of German inheritance tax depends both on the value of the estate and on the relationship between the heir and the decedent.

To avoid double taxation, the German-American Double Taxation Agreement to coordinate tax obligations in both countries. U.S. citizens may, under certain circumstances, claim tax credits on their U.S. tax return for inheritance taxes paid in Germany. However, applying the provisions of the agreement and correctly filing tax returns in both countries often requires the assistance of legal counsel.

Determining the applicable law in inheritance matters is not always straightforward. Under German and EU law, the deceased’s habitual residence at the time of death is often the determining factor. However, if the deceased was a U.S. citizen with assets in Germany, the applicable law may vary depending on the structure of the estate and existing estate planning documents.

In some cases, the heirs can specify in the deceased’s will, through a choice-of-law clause, which law—German or U.S.—should apply. This decision can have significant implications for the distribution of assets and tax obligations.

For US citizens inheriting property in Germany, the following steps are generally required:

1. Receipt of a certificate of inheritance: This official document from a German probate court confirms the heir's statutory inheritance rights.
2. Payment of inheritance tax: The tax return must be filed within three months of becoming aware of the inheritance.
3. Transfer of ownership: The property must be officially registered in the heir's name with the German Land Registry.
4. Real estate management or sales: The heirs must decide whether to keep, rent out, or sell the inherited property, which can involve further tax and legal considerations.

At our We have extensive experience advising clients on cross-border inheritance matters between the USA and Germany. With offices in both countries, our bilingual legal team can guide you through every stage of the inheritance process, including:

• Obtaining probate documents
• Navigating German Inheritance Tax Returns
• Processing international real estate transfers
• Advice on estate planning strategies to minimize the tax burden
• Resolution of inheritance disputes

Thanks to our in-depth understanding of both the German and U.S. legal systems, our firm is able to provide seamless and comprehensive representation—ensuring that our clients’ rights and financial interests are protected across borders.