What Should Be Included in the Estate Inventory and What Should Not?
An estate inventory (Nachlassaufstellung) is a crucial document in inheritance law, as it provides a detailed overview of the deceased’s assets and liabilities. It is the foundation for calculating inheritance taxes and determining mandatory shares (Pflichtteilsansprüche). However, understanding what belongs in the estate and what does not is essential to ensure accuracy and compliance with legal requirements.
1. Items That Belong in the Estate Inventory
1.1 Assets Owned by the Deceased
- Bank Accounts: Balances on all accounts, including checking, savings, and investment accounts.
- Real Estate: Properties owned by the deceased, including their market value at the time of death.
- Personal Property: Valuable items such as jewelry, vehicles, furniture, and artwork.
- Securities: Stocks, bonds, and other financial instruments.
- Cash: Any cash holdings left by the deceased.
- Business Interests: Shares in companies, partnerships, or sole proprietorships.
1.2 Claims and Receivables
Outstanding loans owed to the deceased by third parties.
Pending claims for unpaid salaries, pensions, or other entitlements.
1.3 Life Insurance and Pension Payouts
- With no designated beneficiaries: Life insurance proceeds are part of the estate if the deceased did not name specific beneficiaries.
- Private pensions: If not assigned to a beneficiary, they also belong to the estate.
1.4 Liabilities
- Debts: Loans, credit card balances, and other outstanding financial obligations.
- Funeral Expenses: These are deductible liabilities, as they are considered part of the estate's obligations.
2. Items That Do Not Belong in the Estate Inventory
2.1 Direct Claims of Survivors
Widow’s and Orphan’s Pensions: These are separate social benefits paid directly to surviving dependents and are not part of the estate.
Life Insurance with Named Beneficiaries: Proceeds go directly to the designated beneficiaries and bypass the estate.
Occupational Pensions (bAV): Survivor benefits from occupational pensions are separate from the estate.
2.2 Third-Party Assets
Jointly Owned Property: Only the deceased’s share of jointly owned property is included.
Trust Assets: If the deceased was a trustee, the trust assets do not form part of the estate.
2.3 Non-Transferable Rights
Personal rights, such as claims for damages due to pain and suffering, generally expire upon the individual’s death.
3. Why Accurate Classification Matters
3.1 Inheritance Taxes The estate inventory determines the taxable value of the inheritance. Items included in the estate are subject to inheritance tax, while those excluded, such as life insurance proceeds paid to a named beneficiary, are not.
3.2 Mandatory Shares (Pflichtteilsansprüche) The estate inventory directly affects the calculation of mandatory shares. Mandatory heirs, such as children or spouses, are entitled to a portion of the estate. Including items that do not belong in the estate could inflate the calculated shares, leading to disputes or overpayment.
3.3 Avoiding Legal Disputes An inaccurate inventory can result in legal challenges from heirs, creditors, or tax authorities. Proper documentation ensures transparency and prevents unnecessary conflict.
4. Preparing the Estate Inventory
4.1 Valuation of Assets All assets must be appraised at their fair market value at the time of death. This includes real estate, securities, and personal property.
4.2 Detailed Documentation The inventory must include supporting documents, such as property deeds, bank statements, and loan agreements.
4.3 Liability Assessment Debts and obligations should be listed in detail, including documentation such as loan contracts and unpaid bills.
5. Conclusion
The estate inventory is the cornerstone of inheritance management, influencing both taxation and the distribution of mandatory shares. It is essential to include all assets and liabilities that legally belong to the estate while excluding items such as pensions or life insurance proceeds designated for specific beneficiaries. Proper preparation and legal guidance ensure compliance with tax laws, fair distribution among heirs, and the avoidance of disputes.