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
In addition to my previous comment, here are some further remarks:
- Your sister may not necessarily "need" the assets, but she definitely has as much right to them as you do. Therefore, I would be very cautious about casually including her inheritance share in your project plan.
- Gifts affect the distribution of the estate retroactively for 10 years after the date of death (in case grandma gifts something to you or your mother).
- Regarding your sister: if you receive a larger portion of the property value as a gift (from grandma or mother), your sister should be granted appropriate compensation either through a will or inheritance contract. Otherwise, the relationship will almost certainly suffer at some point.
- Given the large sums involved, as a family (this applies to all parties), it is essential to handle the inheritance in a legally correct manner (either through a lawyer or notary).
- Your sister may not necessarily "need" the assets, but she definitely has as much right to them as you do. Therefore, I would be very cautious about casually including her inheritance share in your project plan.
- Gifts affect the distribution of the estate retroactively for 10 years after the date of death (in case grandma gifts something to you or your mother).
- Regarding your sister: if you receive a larger portion of the property value as a gift (from grandma or mother), your sister should be granted appropriate compensation either through a will or inheritance contract. Otherwise, the relationship will almost certainly suffer at some point.
- Given the large sums involved, as a family (this applies to all parties), it is essential to handle the inheritance in a legally correct manner (either through a lawyer or notary).
B
Bornheimer15 Aug 2019 12:21I have already considered your objections, but I realize I might not have given them enough weight. In any case, I will first wait for the conversation between my grandmother and her daughters. If it turns into a dispute, I will probably suggest involving a mediator. I have already told my grandmother that we need to be careful with communication. At my age and given the family situation, it’s easy to get labeled as the “inheritance hunter.” I have very little to no contact with my aunt. We can see each other face to face, but because of the family divisions, there is naturally potential for conflict. Exactly because of these disputes, my mother, my sister, and I all agree that one side of the family should take full ownership of the house. We three want to work together on this. As mentioned, a sale is off the table.
As Zaba12 and Asuni pointed out, we first need to clarify the inheritance issue. That’s correct—I only have a 25% inheritance right. My mother would gift me her share. Fortunately, I have a good relationship with my sister. She agrees with this approach. By the way, my parents also have a well-maintained house in a good location. In our initial thoughts, my sister would receive it alone as compensation. She has a strong attachment to our family home, whereas I do not—so at least that could be a potential solution. Everything is complicated. I think we need professional help. As a first step, I wanted to gather some input from others here. So, many thanks for your insights on this bright Thursday afternoon!
As Zaba12 and Asuni pointed out, we first need to clarify the inheritance issue. That’s correct—I only have a 25% inheritance right. My mother would gift me her share. Fortunately, I have a good relationship with my sister. She agrees with this approach. By the way, my parents also have a well-maintained house in a good location. In our initial thoughts, my sister would receive it alone as compensation. She has a strong attachment to our family home, whereas I do not—so at least that could be a potential solution. Everything is complicated. I think we need professional help. As a first step, I wanted to gather some input from others here. So, many thanks for your insights on this bright Thursday afternoon!
B
Bornheimer15 Aug 2019 12:34Muc1985 schrieb:
Your grandmother can just as well consider you as the sole heir.... Everything can already be properly arranged by will.The tax exemption for grandchildren is 200,000 euros. This would result in a considerable amount of inheritance tax. However, I am only generally familiar with inheritance tax matters. I think my mother should definitely receive her 50% and then give it to me as a gift. That way, we could avoid the inheritance tax...If you are, for example, the sole heir, you have a tax exemption amount of – as mentioned – 200,000. The amount of inheritance tax is based on the value of the property/land minus the exemption.
In your situation, I really see it as difficult to find a good solution at this point. The decision-maker is entirely your grandmother. She can start giving gifts now, to anyone she wishes. This would reduce the inheritance tax. Likewise, she can create a will and appoint anyone as the sole heir.
In your situation, I really see it as difficult to find a good solution at this point. The decision-maker is entirely your grandmother. She can start giving gifts now, to anyone she wishes. This would reduce the inheritance tax. Likewise, she can create a will and appoint anyone as the sole heir.