Hello everyone,
I am about to take on a very large project (voluntarily) and would appreciate hearing different opinions.
[SITUATION:]
My grandmother (86) owns a 2,300m2 (approximately 25,000 sq ft) plot of land near Frankfurt. Her two daughters will eventually inherit it, but the relationship among the three of them is poor. I am the grandson (31) and get along well with my mother and, uniquely, very well with my grandmother. I am the only one who visits her weekly, does her shopping, and takes care of things for her.
Since my mother and aunt are estranged and unable to handle this inheritance, I am currently considering “stepping in.” Neither my mother nor my aunt could buy out the other, and both would be overwhelmed by such a large property. Selling the entire property is generally ruled out by everyone. That is where I come in, as I would like to take over the whole thing. My mother intends to gift me her share because she wants nothing to do with it. I have not yet spoken with my aunt about this, but that will happen soon. My grandmother approves of my plan since I have been helping maintain the property for years and she knows it would be in good hands with me.
About the property/house:
2,300m2 (approximately 25,000 sq ft), within a short driving distance to Frankfurt. The land can be divided into three parts:
[IMPLEMENTATION]
This is where the challenge lies. I divide my plan according to the property parts. The timelines are short-, medium-, and long-term.
[Part 1 (2019–2021):]
My grandmother wants to gift me Part 1 this year—the meadow. The value is just under 200,000 euros (approximately $215,000), which would be below the inheritance tax threshold for me as a grandson. I would like to build a house with three apartments and rent them out. Since my grandmother’s health is still relatively good, my plan is to build equity with this house until she passes away. Currently, my wife and I can save 15,000 euros (approximately $16,000) per year, which we could invest in this project. Additionally, during this period, my wife will receive a payout from her brother, amounting to 50,000 euros (approximately $54,000). So we already have some equity, including the land itself.
[Part 2 (after my grandmother’s passing):]
Once my grandmother has passed, I would have to buy out my aunt. This will certainly be a significant financial challenge. I would then rent out my grandmother’s two apartments. The local rent rate is about 8 euros (approximately $8.50) per square meter.
[Part 3 (financially dependent):]
The listed barn is my big dream home. I would love to renovate it and live there myself. Being nearby would also make managing and maintaining the property easier. However, this will require a substantial amount of money. Despite available tax benefits for historic properties, this will probably not be easy right after taking out a loan to buy out my aunt.
What do you think? Does it make sense for me to have Part 1 transferred to me now so I can start immediately? Or should I hold off, continue saving, and be prepared to buy out my aunt later? However, if my aunt does not cooperate, this could cause major problems. Inheritance tax is also an important factor given the size of the property. In two weeks, my grandmother plans to speak with her daughters about what they want to do. There are actually no plans yet for the entire property; the three have never really discussed it. I will openly present my idea to all parties. If you have any further suggestions (including tactically smart ways to deal with inheritance tax), I would be very grateful. By the way, the inheritance tax issue is what set this whole process in motion. I want to find a good solution here. My mother and aunt have so far avoided the topic, which I consider highly irresponsible given the asset’s value. Last but not least, I have a sister who supports my plan and currently makes no claim to the property.
Thank you
Bornheimer
I am about to take on a very large project (voluntarily) and would appreciate hearing different opinions.
[SITUATION:]
My grandmother (86) owns a 2,300m2 (approximately 25,000 sq ft) plot of land near Frankfurt. Her two daughters will eventually inherit it, but the relationship among the three of them is poor. I am the grandson (31) and get along well with my mother and, uniquely, very well with my grandmother. I am the only one who visits her weekly, does her shopping, and takes care of things for her.
Since my mother and aunt are estranged and unable to handle this inheritance, I am currently considering “stepping in.” Neither my mother nor my aunt could buy out the other, and both would be overwhelmed by such a large property. Selling the entire property is generally ruled out by everyone. That is where I come in, as I would like to take over the whole thing. My mother intends to gift me her share because she wants nothing to do with it. I have not yet spoken with my aunt about this, but that will happen soon. My grandmother approves of my plan since I have been helping maintain the property for years and she knows it would be in good hands with me.
About the property/house:
2,300m2 (approximately 25,000 sq ft), within a short driving distance to Frankfurt. The land can be divided into three parts:
| Part 1 About 650m2 (approximately 7,000 sq ft) Garden with apple trees | Part 2 About 850m2 (approximately 9,150 sq ft) Residential house (built in 1966), two apartments each 100m2 (approximately 1,075 sq ft). Very solid condition, basement, new heating system, annual maintenance work | Part 3 About 800m2 (approximately 8,600 sq ft) Old sandstone barn (historic monument), good condition, garage, large paved courtyard. Everything in very good condition |
[IMPLEMENTATION]
This is where the challenge lies. I divide my plan according to the property parts. The timelines are short-, medium-, and long-term.
[Part 1 (2019–2021):]
My grandmother wants to gift me Part 1 this year—the meadow. The value is just under 200,000 euros (approximately $215,000), which would be below the inheritance tax threshold for me as a grandson. I would like to build a house with three apartments and rent them out. Since my grandmother’s health is still relatively good, my plan is to build equity with this house until she passes away. Currently, my wife and I can save 15,000 euros (approximately $16,000) per year, which we could invest in this project. Additionally, during this period, my wife will receive a payout from her brother, amounting to 50,000 euros (approximately $54,000). So we already have some equity, including the land itself.
[Part 2 (after my grandmother’s passing):]
Once my grandmother has passed, I would have to buy out my aunt. This will certainly be a significant financial challenge. I would then rent out my grandmother’s two apartments. The local rent rate is about 8 euros (approximately $8.50) per square meter.
[Part 3 (financially dependent):]
The listed barn is my big dream home. I would love to renovate it and live there myself. Being nearby would also make managing and maintaining the property easier. However, this will require a substantial amount of money. Despite available tax benefits for historic properties, this will probably not be easy right after taking out a loan to buy out my aunt.
What do you think? Does it make sense for me to have Part 1 transferred to me now so I can start immediately? Or should I hold off, continue saving, and be prepared to buy out my aunt later? However, if my aunt does not cooperate, this could cause major problems. Inheritance tax is also an important factor given the size of the property. In two weeks, my grandmother plans to speak with her daughters about what they want to do. There are actually no plans yet for the entire property; the three have never really discussed it. I will openly present my idea to all parties. If you have any further suggestions (including tactically smart ways to deal with inheritance tax), I would be very grateful. By the way, the inheritance tax issue is what set this whole process in motion. I want to find a good solution here. My mother and aunt have so far avoided the topic, which I consider highly irresponsible given the asset’s value. Last but not least, I have a sister who supports my plan and currently makes no claim to the property.
Thank you
Bornheimer
Disinheriting does not mean she is entitled to nothing! She still has a right to the compulsory portion, which is clearly "only" 50% of her actual inheritance share, but on the other hand, Grandma must also consent to this.
In any case, this is a very difficult situation to plan for, AND as already mentioned, if Grandma ends up needing government assistance, the state will definitely come after you. Gifting assets does not protect you from this!
In any case, this is a very difficult situation to plan for, AND as already mentioned, if Grandma ends up needing government assistance, the state will definitely come after you. Gifting assets does not protect you from this!
In situations like this, I have a very bad feeling, especially regarding the aunt, who is practically being pushed out. Does she perhaps have children who would be indirectly affected by the planned approach?
We don’t know the full conflict, but it certainly won’t get any easier if the aunt is effectively being bypassed.
And in the case of your grandmother needing care, if her pension isn’t enough and state support is required, the children—meaning your mother and your aunt—will be held responsible. She won’t be happy about that...
For your planning, it’s also important to know whether you can pay for the planned house on the first part of the property with your existing funds. If not, you will need to use the rental income from that part to cover the loan payments, rather than to build up equity.
We don’t know the full conflict, but it certainly won’t get any easier if the aunt is effectively being bypassed.
And in the case of your grandmother needing care, if her pension isn’t enough and state support is required, the children—meaning your mother and your aunt—will be held responsible. She won’t be happy about that...
For your planning, it’s also important to know whether you can pay for the planned house on the first part of the property with your existing funds. If not, you will need to use the rental income from that part to cover the loan payments, rather than to build up equity.
B
Bornheimer15 Aug 2019 16:19No one wants to bypass the aunt. She should be fairly compensated. We believe that this is actually the best solution for her as well. There is no way she can pay us out, and physically she is not capable of managing such a large property. She has also never shown any interest in the house or the land. A cash payout would probably be the best option for her. That is my current assessment. I will know more in two weeks.
Of course, financing is planned for the house on plot 1. However, I may have been too optimistic in thinking that additional financing for the aunt’s payout on day X would be possible.
Difficult, difficult. So, for me it is clear now: find out what the aunt wants in two weeks. If she has no interest in the house and wants money → proceed to the notary and find the best possible scenario (whether gift, sole inheritance, etc.). If she does not want to be paid out (for whatever reason), it will be a drama in several acts.
Of course, financing is planned for the house on plot 1. However, I may have been too optimistic in thinking that additional financing for the aunt’s payout on day X would be possible.
Difficult, difficult. So, for me it is clear now: find out what the aunt wants in two weeks. If she has no interest in the house and wants money → proceed to the notary and find the best possible scenario (whether gift, sole inheritance, etc.). If she does not want to be paid out (for whatever reason), it will be a drama in several acts.
N
Niederbayer15 Aug 2019 16:55Hello, the best approach is to consult a specialist lawyer to get legal advice and ensure everything is legally indisputable. And very important! Before going to the notary, a medical report on your grandmother’s condition should be prepared. There is a lot of money involved here, and I speak from experience that many people feel cheated regarding inheritance later on – even if it is only about 0.0000000001 cents.
I don’t think a listed (protected) barn is worth a lot. It depends on the condition. An undeveloped area probably has a market value of the mentioned 220€ (about 235 USD). This is usually lower for developed land. Therefore, I would recommend having the property professionally appraised, rather than estimating roughly. The encumbrances registered in the land register also play a major role. One small tip: a registered right of residence significantly reduces the market value of a property as perceived. However, it can backfire when it comes to nursing home costs.
A few more points:
If your grandmother talks to her daughters about the inheritance, there must not be any indication that it has already been settled beforehand.
If possible, have your aunt paid out immediately with a notarized waiver of inheritance. Real estate prices continue to rise – meaning the estate’s capital will increase. Then transfer the properties immediately since their value rises and the tax exemption remains the same. But you must keep in mind that possible claims from the nursing home (hopefully not, but it must definitely be considered) may come up.
Don’t act as a mediator if you are the beneficiary. That leaves a bad impression.
So, everything is a bit all over the place, but many important points are included.
Best regards
I don’t think a listed (protected) barn is worth a lot. It depends on the condition. An undeveloped area probably has a market value of the mentioned 220€ (about 235 USD). This is usually lower for developed land. Therefore, I would recommend having the property professionally appraised, rather than estimating roughly. The encumbrances registered in the land register also play a major role. One small tip: a registered right of residence significantly reduces the market value of a property as perceived. However, it can backfire when it comes to nursing home costs.
A few more points:
If your grandmother talks to her daughters about the inheritance, there must not be any indication that it has already been settled beforehand.
If possible, have your aunt paid out immediately with a notarized waiver of inheritance. Real estate prices continue to rise – meaning the estate’s capital will increase. Then transfer the properties immediately since their value rises and the tax exemption remains the same. But you must keep in mind that possible claims from the nursing home (hopefully not, but it must definitely be considered) may come up.
Don’t act as a mediator if you are the beneficiary. That leaves a bad impression.
So, everything is a bit all over the place, but many important points are included.
Best regards
B
Bornheimer15 Aug 2019 17:08Niederbayer schrieb:
Hello, it’s best to consult a specialist lawyer to ensure everything is legally airtight. And very important! Before going to the notary, a medical report on your grandmother’s condition should be prepared. This involves a lot of money, and I speak from experience that many people feel cheated in inheritance cases— even if it’s just by 0.0000000001 cents.
I don’t think a listed heritage barn is necessarily very valuable. It depends on its condition. An undeveloped plot probably has a market value around the mentioned 220€ (about 240 USD). This is usually lower than developed land. Therefore, I would have the property professionally appraised rather than estimating roughly. The encumbrances registered in the land registry are also very important here. One more little tip: a registered right of residence significantly reduces the market value of a property. However, this can backfire if care costs come into play.
A few more small points:
If your grandmother talks to her daughters about the inheritance, no hint should be given that it’s already settled beforehand.
If possible, have your aunt paid out immediately with a notarized waiver of inheritance. Real estate prices are rising, meaning the estate’s capital will increase. Afterwards, transfer the properties immediately because their value rises while tax allowances remain unchanged. But you must keep in mind that claims from the care home may arise (hopefully not, but this absolutely needs to be considered).
Don’t act as mediator if you are the beneficiary. That can come across as questionable.
So, this is a bit all over the place but there are many important points in here.
Regards 
If you plan to leave more than just a small amount and are still of sound mind, you as the testator should not leave your inheritance to chance like a rudderless ship. It is better to arrange things yourself. Assets that still belong to the testator at the time of death become the estate and are subject to inheritance law. However, as long as you are capable, you can donate everything you own without reducing any mandatory shares; and once the assets are part of a foundation, the death of the founder does not change their status. Also, take a look at foundation law in neighboring countries to see what kinds of foundation purposes are possible, including donations to the founder up to the end of their life. In my opinion, as a curator, you would be in a much more favorable position, even when acting as the executor of grandma’s will while she is still alive.
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Bornheimer schrieb:This gift from your mother would be treated practically the same as an inheritance for tax purposes, and if you have already used up your tax exemption with the inheritance, there would usually be none left for the gift, even if the tax rate might theoretically be more favorable for you because you are one degree closer related to your mother than to grandma.
Ich denke das meine Mutter auf jeden Fall ihren 50% bekommen sollte und mir dann schenken sollte.
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