Ensuring inheritance when buying a house

23 posts in this topic

Posted

Hi all,

My husband (EU citizen, not German) and I (American) are about to buy a house. If my name is not not on the deed (nor on the mortgage), will I be able to inherit the house without a will/testament in Germany? We don't have children (yet) and were married in the EU (not Germany) with community property.

An advantage to my not being on the deed of the house, of course, is not having to declare it to US tax authorities.

Thanks for any advice you can provide!

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Posted

yes you will,but you can make it much easier if you write a testament

without testament

http://www.finanztip.de/recht/erbrecht/allg.htm

it says you as the wife will inherit everything (including debts)

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Posted

Quite honestly, I think you should insist on having your name entered on the deeds anyway - it really will make life easier if and when it comes to a situation of either inheritance or seperation...

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Posted

As an American, you would inherit tax-free anything left or given by a spouse. That's not true under German tax law.

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Posted

Quite honestly, I think you should insist on having your name entered on the deeds anyway - it really will make life easier if and when it comes to a situation of either inheritance or seperation...

roby100 is right on the ball with the seperation bit,hopefully not but you never know what life throws at you

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Posted

Are you sure that you would have to pay US inheritance taxes? Maybe the double-taxation exemption would apply because you'd be subject to German inheritance taxes.

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Posted

How old are you?

Your first priority will be protecting yourself in case of divorce.

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Posted

There is no American/US inheritance tax between spouses. I already pointed that out. It's a tax-free transfer.

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Posted

As of 2013, the federal estate-tax exclusion in the United States is set permanently at $5 million and is indexed for inflation which means that the amount for 2013 works out to be $5,250,000.

There are four forms of co-ownership in the United States:

(1) Tenancy in common whereby a property is held by two or more persons and, upon death, each owner's interest in the property passes to his/her heirs. What this means is that, if the second joint owner was not named an heir by the first joint owner (by a will or trust), then the second joint owner does not become the full owner of the property upon the death of the first joint owner.

(2) Joint tenancy with right of survivorship whereby a property is owned by two or more persons and, upon death, each owner's interest in the property automatically passes to the other co-owners. This type of joint tenancy is commonly used by married persons. If the husband dies first, then the wife becomes the sole owner of 100% of the property, and vice versa.

(3) Tenancy by the entirety is a type of joint tenancy that applies only to a husband and wife during the marriage. As long as they are still married, neither the husband nor the wife separately have an interest that can be sold, leased, mortgaged or liened against. The property cannot be partitioned or divided between them. Each spouse has an undivided interest in the whole property and the right to sole ownership when the other spouse dies. It is necessary that any document relating to property held in a tenancy by the entirety be signed by both husband and wife.

(4) Community property is statutorily created joint ownership that applies only to husband and wife who reside or own property in a state that has enacted the community/marital property laws. Property is divided into two categories: separate property and community (marital) property. If you have ever lived in a community property state in the United States while married, property that became "community property" in that state retains that character even if you move to a non-community state.

I know almost nothing about German laws regarding property ownership, but if I were an American buying property in Germany or any other European country with my EU husband, I would make darn sure that any property purchased by my husband and me had both our names on the deed, title, mortgage, homeowner's insurance, etc...and that the property would be purchased under the German (or European) equivalent of joint tenancy with right of survivorship. And that goes for any other type of property such as a vehicle, boat, etc.

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Posted

Unfortunately, there is taxation in Germany on inheritance by spouses. But yes, I would make certain that I was registered on the deed as well.

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Posted

Hi all,

My husband (EU citizen, not German) and I (American) are about to buy a house. If my name is not not on the deed (nor on the mortgage), will I be able to inherit the house without a will/testament in Germany? We don't have children (yet) and were married in the EU (not Germany) with community property.

An advantage to my not being on the deed of the house, of course, is not having to declare it to US tax authorities.

Thanks for any advice you can provide!

Without knowing your husbands nationality and where you were married the questions who gets what in the case of your husbands death can't be answered.

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Posted

Now that you're getting ready to make a major maybe once-in-a-lifetime purchase, have you and your husband thought about purchasing term life insurance policies and naming each other as beneficiaries? I don't know if purchasing term life insurance is common or customary in Germany or Europe but I personally would have serious reservations about making such a major purchase without life insurance in case something happened to one or the other. Term life insurance is the least expensive type of life insurance you can buy, it's usually based on your age, and some companies may ask if you and/or your husband are smokers (if yes, you'll pay a little more) or if you have a fatal illness (if yes, you'll be denied a policy). If you buy the house, and 6 months later your husband is killed in a car accident, can you afford the mortgage and general maintenance, and support yourself (and children, if any) all by yourself? What if the reverse happened and you die first? As an American, you can call or contact any one of the major insurance companies in the United States (USAA, State Farm, Met Life, etc.) and inquire about term life insurance for both you and your husband (when I lived in Germany a few years ago, we had flat rate telephone service to the States using Deutsche Telekom). You should really have these policies in place anyway, regardless of the status of your homeownership.

P.S. I am not employed by the financial industry here in the United States.

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Posted

I dont understand why anyone is thinking of buying a house when the thoughts of Divorce are foremost in their mind...

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Posted

The OP said nothing about divorce, but by post #3 it was out on the table thanks to someone else (who AFAIK doesn't know the OP).

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Posted

My error...

Appologies..

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Posted

I only mentioned the possibility of divorce as a consideration when pondering all the ramifications of buying property together. Even though there is only a 50% chance of it happening.

I certainly wish this couple a long and healthy life together.

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Posted

Yes, Piggy, that was me, and no Frollie, I do not know the OP - the number of Americans I know can be counted on one hand, and the OP isn´t one of them.

I made my post in order to point out the simple truth that if the OP doesn´t have her name on the deeds she will have a fight on her hands should a divorce ever be necessary...

(I hope it won´t but nobody knows what the future will bring!)

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Posted

Thanks, all, for your advice on what we should do. For now, it sounds like the safest bet with respect to inheritance is for me to also be on the deed with the appropriate survivor-ship rights. That said, we'll discuss with a local lawyer as well as look into life insurance and establishing wills/testaments. Give me a few weeks and I'll report back.

(For those of you concerned about my being protected in case of separation/divorce -- my being on the deed has always been on the table, don't worry. We are simply trying to understand how to avoid increasing our US tax liabilities and still make sure I can inherit the house.)

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Posted

Do you still file your taxes in the United States every year on or before April 15th? If yes, once you purchase the house, you might be able to itemize your tax filing and deduct the various taxes you will be paying on your new house (property taxes) and you may be able to deduct the interest you are paying on the mortgage loan. At least that's how it is if you purchase a home in the United States. In your case, it would be beneficial for you to consult a German tax attorney who is also familiar with U.S. taxes.

Are German mortgages set up the same way as mortgages here in the States? For example, when you buy a home here in the States, you pay a huge amount of interest up front in the loan, and by the time you pay off the loan many years later the interest paid every month is very low. For example, let's say your mortgage payment is $1000 every month (here in the States); in reality you are probably paying $800 per month in interest on the loan and $200 towards the principal of the loan, the next month you might be paying $799 per month in interest and $201 towards the principal of the loan, etc. That's why it's better to itemize your tax filing every year when you purchase a home (here in the States) because for about the first half of the loan you are paying a lot in interest every month. The interest becomes less and less as time goes by, but it is still more beneficial to itemize your tax filing even for the last year you are paying on the mortgage.

You might also want to find out if you can obtain a mortgage from a reputable company here in the United States. If you are affiliated with the U.S. military in any way (maybe your grandfather fought in WWI or your second cousin whom you have never met was in the Marines), you can obtain an account with USAA, and they could offer your advice on this matter.

P.S. No, I am not employed by USAA.

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Posted

If she isn't, and has any earnings, she is breaking the law. US citizens and residents are required to file a tax return in the US- always. But in Germany mortgage interest on a private residence is not deductible and it is a strange case indeed when one winds up owing tax in the US, where the rate is 1/3 that of Germany.

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