Estate Valuation: German vs. Thai Approaches

Valuing an estate is a critical step in inheritance processes, determining the distribution of assets, payment of debts, and tax obligations. While estate valuation is essential in both Germany and Thailand, the methods, legal frameworks, and considerations differ significantly between the two countries.

 
1. Purpose of Estate Valuation

In Germany, estate valuation serves multiple purposes:

Calculating Mandatory Shares: The value of the estate determines the portion owed to heirs entitled to a mandatory share (Pflichtteil).
Tax Assessment: Inheritance tax is based on the estate’s total value, with different rates and exemptions depending on the heir's relationship to the deceased.

In Thailand, estate valuation focuses on:

Asset Distribution: Determining the value of assets for equitable division among heirs under Thai inheritance law.

Tax Assessment: Inheritance tax applies only to estates exceeding 100 million THB, making valuation crucial for high-value assets.
 
2. Scope of Assets Considered

In Germany the estate includes:

All assets owned by the deceased at the time of death (e.g., real estate, bank accounts, investments, and personal belongings).
Lifetime Gifts: Significant gifts made in the 10 years before death may be added to the estate value for calculating mandatory shares.
Debts: Liabilities, such as loans and funeral costs, are deducted from the total estate value.

In Thailand The estate consists of:

Assets located in Thailand, including real estate, bank accounts, and movable property.
Unlike Germany, lifetime gifts are not typically factored into estate valuation, unless explicitly addressed in a will.
Debts are subtracted to determine the net value for distribution.
 
3. Valuation Methods

Estate valuation in Germany is highly formalized:

Professional Appraisals: Assets such as real estate and businesses require certified appraisals to determine their market value.
Bank Statements: The value of financial accounts is based on balances at the time of death.
Inventories: Executors or probate courts may require a detailed inventory of the estate’s assets.

In Thailand, valuation methods are less regulated:

Market Value Estimates: Real estate and assets are often valued based on informal market estimates.
Bank Accounts: Balances are determined by the financial institutions where the accounts are held.
No Formal Inventory Requirement: Executors may rely on the information provided by heirs or documents left by the deceased.
 
4. Tax Implications

German Inheritance Tax: Valuation directly affects inheritance tax rates, which range from 7% to 50%.
Exemptions: Spouses and children benefit from substantial tax-free allowances, reducing taxable estate value.

Thai Inheritance Tax: Applies only to estates exceeding 100 million THB. Rates are 5% for direct heirs and 10% for others.

Limited Exemptions: Taxable assets are generally limited to those physically located in Thailand.
 
5. Role of Executors and Courts

In Germany Executors and probate courts play an active role in ensuring accurate valuation, particularly for contested estates or complex assets.
Courts may mandate appraisals or audits for transparency.

In Thailand Executors handle valuation informally, and courts typically intervene only if disputes arise.
There is less regulatory oversight, relying more on family agreements or executor decisions.
 
6. Challenges in Cross-Border Valuation
For estates involving assets in both Germany and Thailand, valuation can become complicated:

Currency Conversion: Differences in currency values and exchange rate fluctuations affect estate calculations.
Divergent Standards: Formal valuation in Germany may conflict with informal methods used in Thailand, leading to discrepancies.
Double Taxation: Coordination between the two countries is necessary to avoid double taxation on cross-border assets.
 
Conclusion
Estate valuation in Germany is structured and regulated, ensuring transparency and compliance with inheritance tax laws. In contrast, Thailand’s approach is more flexible, focusing on practicality and simplicity. For cross-border estates, understanding these differences and seeking professional guidance ensures accurate valuation and smooth inheritance processes.