Tax Advisor Costs: How to Handle Financial Planning Without a Certificate of Inheritance

1. Introduction
The period between the death of a loved one and the issuance of the Certificate of Inheritance (Erbschein) can be a time of financial uncertainty. Tax obligations, including inheritance tax and other estate-related liabilities, must often be addressed before the estate is fully accessible. Engaging a tax advisor is essential for managing these complexities, but covering their fees without immediate access to estate funds presents unique challenges. This article examines the legal framework for managing tax advisor costs, outlines practical solutions, and highlights key considerations for heirs.

 
2. The Role of Tax Advisors in Estate Management
2.1 Tax advisors play a critical role in ensuring compliance with inheritance tax obligations and minimizing liabilities. Their expertise helps heirs navigate complex tax laws, file necessary declarations, and resolve cross-border tax issues.

2.2 Tax advisors may also assist in evaluating the estate’s financial situation, identifying potential deductions, and advising on asset transfers to optimize the tax burden.

2.3 For estates involving international elements, tax advisors ensure compliance with the laws of all relevant jurisdictions and assist in coordinating payments to foreign tax authorities.

 
3. Legal Framework for Covering Tax Advisor Costs
3.1 In Germany, tax advisor fees incurred during estate administration are considered estate liabilities. These costs are reimbursable from the estate once the Certificate of Inheritance is issued.

3.2 Banks generally freeze the deceased’s accounts until the Erbschein is presented. However, they may allow payments for necessary estate-related expenses, including tax advisory services, if sufficient documentation is provided.

3.3 Executors (Testamentvollstrecker) authorized by the deceased’s will can arrange for tax advisor payments on behalf of the estate, even before the Erbschein is issued, provided their role is formally recognized.

 
4. Challenges Without Immediate Access to Estate Funds
4.1 Heirs may face difficulty covering tax advisor fees during the interim period. Without the Erbschein, estate funds remain inaccessible, and personal resources may be needed to fund these services.

4.2 Delays in addressing tax obligations can result in penalties or interest charges, increasing the financial burden on the estate and heirs.

4.3 For estates with multiple heirs, disagreements about the allocation of tax advisor costs can create further complications.

 
5. Practical Solutions for Managing Tax Advisor Costs
5.1 Heirs can choose to advance tax advisor fees from their personal funds. These expenses should be meticulously documented, as they can typically be reimbursed once the estate is settled.

5.2 Some tax advisors offer deferred payment arrangements, allowing fees to be paid from the estate after the Certificate of Inheritance is issued. Proof of heirship or executor authority may be required.

5.3 Pre-financing services, provided by professional estate management firms, can cover tax advisor costs during the interim period. These services ensure that critical financial planning tasks are not delayed due to funding constraints.

 
6. Risks of Not Engaging a Tax Advisor Early
6.1 Missing statutory deadlines for filing inheritance tax declarations can lead to penalties and additional interest charges, reducing the estate’s net value.

6.2 Incorrect or incomplete tax filings may trigger audits or disputes with tax authorities, prolonging the probate process and increasing administrative costs.

6.3 Without professional guidance, heirs may overlook opportunities to minimize tax liabilities, such as deductions or exemptions available under German inheritance tax laws.

 
7. Differences Between Germany and Other Legal Systems
7.1 In Germany, tax advisor fees are treated as estate liabilities and reimbursable once the estate becomes accessible. This structured approach ensures transparency and equitable treatment of heirs.

7.2 In contrast, countries like Thailand often rely on informal agreements among heirs for managing tax-related matters. While this may expedite decision-making, it can lead to disputes or legal ambiguities without clear documentation.

 
8. Key Considerations for Managing Tax Advisor Costs
8.1 Heirs should prioritize selecting a qualified tax advisor early in the process, particularly for estates with complex tax obligations or international elements.

8.2 Collaborative decision-making is essential for joint heirs. Agreeing on cost-sharing arrangements for tax advisory fees can reduce conflict and streamline the estate’s financial planning.

8.3 Maintaining detailed records of tax advisor fees and related expenses ensures smooth reimbursement once the estate is fully accessible.

 
9. Conclusion
Tax advisors are indispensable in managing the financial complexities of estate administration, particularly during the interim period before the Certificate of Inheritance is issued. While accessing estate funds to cover their fees can be challenging, solutions such as personal advances, deferred payment plans, and pre-financing options enable heirs to engage professional assistance without delay. Proactively addressing tax obligations ensures compliance, minimizes liabilities, and protects the estate’s value, setting the stage for a smoother inheritance process.