Inheritance of securities: How to save tax
If you want to bequeath a securities portfolio, you have two options: either bequeath it in its entirety or sell the shares and pass on the cash. From a tax perspective, there is a difference.
If securities in a portfolio are to be bequeathed, the question arises from a tax perspective: Is it better to sell the shares and pass on the proceeds as cash or to transfer the portfolio as it is? According to the estimate of the Federal Taxpayers' Association, this depends on many factors - for example, the portfolio value, potential gains due to price increases, and the relationship between the bequeather and the heir and the applicable exemption limit.
The fine print: If the entire stock package is bequeathed, in certain circumstances, inheritance tax may be due if the inheritance exceeds the applicable exemption limit for the beneficiary. For spouses, this limit is €500,000, for children €400,000 each, for grandchildren €200,000 each, for siblings and distant relatives or acquaintances €20,000. If the portfolio shares are sold prior to bequeathing, any gains are additionally subject to income tax or capital gains tax.
If stocks are bequeathed, the market value on the day of death of the bequeather is used for tax purposes. Subsequent market fluctuations no longer play a role. If the portfolio has made a profit up to this point in time, the Federal Taxpayers' Association recommends transferring the entire stock package. In this way, taxation of the gains can be avoided - possibly even completely.
Advantages for heirs with low income
In particular, if the portfolio is being transferred to children or grandchildren who have no or only low personal income, this can be advantageous. They can then sell the shares piecemeal over the years and use their personal tax allowance of €1,000 per year anew. If they do not reach the base allowance (€11,604 in the year 2024), they can even keep larger gains untaxed.
If the gain exceeds the deductible amounts, low-income individuals and those without income may still benefit from another advantage: If their personal tax rate is lower than the capital gains tax rate of 25%, the gain is only taxed at this rate. "This can be claimed in the tax return along with the submission of the investment for capital gains tax," says Daniela Karbe-Geßler from the Federal Taxpayers' Association.
- If you're considering inheritance law with regards to equity funds, you should be aware of the tax implications.
- Inheritance law involves complex legal issues when dealing with securities, such as ETFs or fixed-term deposits.
- Consumers should seek advice from a financial advisor before making decisions about inheritances, including cash, Gold, or other assets.
- The sale of securities before bequeathing may incur income tax or capital gains tax, according to inheritance law.
- Inheritance tax may be due if the portfolio's market value exceeds the applicable exemption limit for the beneficiary, as outlined in inheritance law.
- The Taxpayers' Association highlights that taxation of gains can be avoided by transferring the entire stock package, following the rules of inheritance law.
- Heirs with low income can benefit from selling shares piecemeal over time, as outlined in inheritance law, utilizing their annual tax allowance.
- Even individuals with low or no income can still benefit from inheritance law by being taxed at a lower rate than the capital gains tax rate, as emphasized by Daniela Karbe-Geßler.
