To ensure this, testators should make some preparations. This includes powers of attorney, early donations and transfers to a single person, not to a community of heirs. Two tax advisors and an asset manager explain how this works in detail.
Anyone who inherits a custody account often has one central problem: without a certificate of inheritance or a will that has been opened by the probate court, banks will not grant access. But it can take months for these documents to be available after a death. During this time, heirs may have to watch helplessly as prices collapse on the stock market.
“However, this doesn’t play a role when calculating the inheritance tax, as the deposit value on the day of death counts,” says Katrin Dorn, who works as a tax advisor and partner at Möhrle Happ Luther in Hamburg and Munich. The lowest price quoted on the reporting date must be used for the valuation of securities (§ 11 BewG). The tax office does not take into account which direction the prices will then move or when an heir can actually dispose of the portfolio.
In order to speed up access to the custody account, testators can grant their future heirs a power of attorney at an early stage. “An authorized representative can often act on the basis of the power of attorney immediately after the death,” says Dorn. But it has to be the right power of attorney.
“Banks usually only recognize the bank’s own powers of attorney without any problems,” says Agnes Fischl, tax advisor and lawyer at the Schütz & Fischl law firm. “In the case of general powers of attorney, even if they were issued after death and certified by a notary, checks are carried out first.” These serve to protect the bank. Finally, a submitted power of attorney could be out of date. If, on the other hand, a testator granted a bank power of attorney and later revoked it, the institute would be aware of this.
“I strongly recommend an official custodian bank power of attorney,” says Benjamin Hofmann, asset manager at Habbel, Pohlig & Partner. The authorized representative also receives their own online access data, with which they can act and gain access to the depot. This can be useful not only in the event of death, but also if a person granting the power of attorney cannot take care of the portfolio themselves for a long period of time.
However, you should not be guided by the organizational advantages alone when issuing a power of attorney. Finally, representatives gain great influence. “Governers of power of attorney should therefore think carefully about who they are granting such extensive power of disposal to,” says Dorn. You should also carefully consider whether you are appointing several children as representatives, as this often leads to conflicts in practice.
Even if the deposit falls to a community of heirs, this can be unfavorable. “In principle, the co-heirs can only dispose of the deposit together,” says Dorn. This often leads to disputes or blockages in action. In this case, too, a quick reaction to current market events could be impossible.
According to inheritance law attorney Fischl, an executor who distributes and, if necessary, manages the estate on behalf of the deceased would not change this. "If the heirs are at odds, an executor can ensure that the estate is handled in an orderly manner. But he also has to first legitimize himself to the bank holding the depository," says Fischl. Therefore, he is usually not able to access the depot immediately after death.
Possible solution: “An heir could receive the deposit as part of a so-called advance bequest in addition to his share of the inheritance,” says the lawyer. This means that the heir alone could dispose of it.
Many testators want to pass on their assets to the next generation in the most tax-efficient way possible. To do this, you can use the tax allowances every ten years. Parents can each transfer assets of 400,000 euros to their children tax-free; for grandparents it is 200,000 euros.
“If you want to transfer part of your portfolio, you should ideally take advantage of price weaknesses,” says asset manager Hofmann. “However, such timing attempts should not result in the donation being postponed for too long and possibly losing tax advantages as a result.”
The practical implementation at the bank or broker is simple: As with payment accounts, banks must also ensure that deposits are moved quickly at the customer's request - according to the requirements of the financial regulator Bafin, within three weeks. “With such a depository transfer, securities can be transferred both to your own depository at another bank and to the depository of another person,” says Hofmann. This applies to the entire portfolio as well as to individual securities.
As part of a gift, the securities are transferred to the new owner at their cost price. With such a “free transfer” there is no withholding tax. Important when transferring a portfolio: The securities cannot be traded during the transfer. Furthermore, it is not technically possible to transfer fractional shares of securities.
Hardly anyone knows how long he or she will live. Therefore, it is almost impossible to find the optimal time to sell securities. With regard to the withholding tax, however, tax advisor Dorn advises: "Anyone who has high loss carryforwards from income from capital assets should bear in mind that they cannot pass these on to the next generation. Therefore, compensation during their lifetime through the realization of profits can make sense."
The withholding tax that arises when selling securities has to be paid sooner or later anyway. If the donor bears it, the remaining value of the gift and therefore any gift tax may be lower. Which strategy is cheaper must always be checked on a case-by-case basis.
Another option is to donate a deposit subject to usufruct. The recipient becomes the owner of the securities account, but the donor receives the income, i.e. dividends and interest. He can also reserve extensive participation or control rights.
“This arrangement offers significant potential for reducing gift tax, as the value of the usufruct reduces the tax value of the gift,” says Dorn. However, not every bank offers such usufruct deposits.
The value of the usufruct depends on the expected future income from the portfolio and the statistical life expectancy of the usufructuary. An example: If a 60-year-old father transfers a portfolio worth 800,000 euros with an annual return of four percent, the capital value of the usufruct is 409,536 euros.
From the perspective of the tax office, the daughter receiving the gift in this example case would only receive 390,464 euros. If she has not received any further gifts from her father in the past ten years, the transfer would remain within her tax allowance.
However, such a design should be carefully planned. "The transfer of a custody account is fundamentally final. Anyone who gives assets away should therefore think about their own financial security at an early stage," says Dorn. It is advisable to provide for reclaim rights in the gift agreement for certain cases, such as in the event of the recipient becoming insolvent, divorced or predeceased.
In addition, the donor cannot easily terminate the usufruct. “The free waiver of usufruct can itself be viewed as a gift,” says Dorn. An alternative could be a compensation for the usufruct. In certain cases, this does not represent remuneration for the donor in the income tax sense, says Dorn. Therefore it would not be taxed.
