An estate in the US — and obligations in Germany.
A parent, sibling or partner lived in the US, or left a US bank account, brokerage account, retirement plan or real estate. The US estate follows US rules. But as a German resident you also have German obligations — above all German inheritance tax. We cover the German side and work hand in hand with the US attorney and CPA.
Sie leben in Deutschland? Wir beraten Sie selbstverständlich auf Deutsch.
Four points to check early
How do the US assets pass?
Probate, trust, beneficiary designation or joint account — each route is treated differently, both in the US and for German tax purposes.
Notify the German tax office
An inheritance must be reported to the Finanzamt within three months of learning of it (§ 30 ErbStG), even if the assets are in the US.
German inheritance tax and credit
If you live in Germany, German inheritance tax generally covers everything you receive worldwide. US estate tax can often be credited under the Germany–US estate tax treaty and German law.
Distributions and trusts
Payouts from US trusts and retirement accounts can have German tax consequences. Please let us check them before money is transferred.
The German side, covered
We know how US estates work in practice — and what the German tax office will ask. You get advice in German or English, and we stay in touch with the US side.
- Notification to the German tax office
- German inheritance tax return and credit of US estate tax
- Assessment of US trusts, retirement accounts and beneficiary designations
- Coordination with the US attorney, executor and CPA
- Planning ahead if you expect to inherit from family in the US
The trust works in the US. Will it work in Germany?
Revocable living trusts, family trusts and discretionary trusts are standard US estate planning. German tax law has no equivalent concept. If a beneficiary lives in Germany, the German tax office forms its own view of the trust — and that view can differ considerably from the one your US advisers work with.
- A revocable trust that avoids probate
- Distributions under the trust terms, often over several years
- US estate tax settled at the level of the estate
- A trustee who administers the assets for the family
- A separate pool of assets under foreign law (Vermögensmasse ausländischen Rechts)
- Each distribution as a separate taxable acquisition — possibly in the least favourable tax class
- No or only limited credit for US estate tax paid years earlier
- Income of the trust attributed to German beneficiaries, even before anything is paid out
From your parent — or from the trust?
Whether you acquire from the deceased or from the trust can decide your tax class. For a child, that may mean an allowance of €400,000 and rates of 7–30% — or €20,000 and 30–50%.
§§ 3(2) no. 1, 7(1) no. 9, 15, 16, 19 ErbStG
Distributions over time
Distributions spread over several years can each count as a new acquisition. Allowances are used up, and the credit for US estate tax is limited in time.
§§ 7(1) no. 9 sent. 2, 14, 21 ErbStG
Income tax on distributions
Distributions may also be subject to German income tax. Whether this extends to distributions of capital is currently disputed between the tax authorities and the courts.
§ 20(1) no. 9 EStG
Tax on income you never received
Income of certain foreign trusts can be attributed to beneficiaries in Germany every year — even without a distribution. Recent case law has opened new arguments, and a reform is under discussion.
§ 15 AStG; BFH 4 Dec 2024, IX R 32/22
A trustee living in Germany
If a family member in Germany acts as trustee, the trust itself may be considered managed from Germany — with German tax consequences for the trust.
§ 10 AO; § 1(1) no. 5 KStG
Reporting and proof
Acquisitions must be reported to the tax office within three months. Where a beneficiary argues that a payment is not taxable, it is usually the beneficiary who has to prove it.
§ 30 ErbStG; BFH 25 Jun 2021, II R 31/19
Same inheritance, very different result
German inheritance tax depends on the relationship between the transferor and the recipient. If the trust — rather than the parent — is treated as the transferor, the most favourable class for children may be lost. Recent European case law has confirmed that the less favourable class can apply to foreign family structures.
EuGH 13 Nov 2025, C-142/24. Figures illustrate the statutory framework only; whether a trust is treated this way depends on its terms and the individual circumstances.
| Child (class I) | Class III | |
|---|---|---|
| Personal allowance | €400,000 | €20,000 |
| Tax rates | 7–30% | 30–50% |
| Allowance reused | once within 10 years (§ 14 ErbStG) | |
The best time to look at the trust is before it matters
Before the settlor’s death
Review the trust terms with German beneficiaries in mind. Amendments — agreed with the US estate planning attorney — can often avoid the most expensive outcomes.
During administration
How and when the trustee distributes matters: a timely wind-up, distributions in kind and avoiding staged payouts can make a considerable difference.
Certainty in advance
Where the amounts justify it, a binding ruling from the German tax office (§ 89(2) AO) can confirm the treatment before distributions are made.
General information, not tax or legal advice. The German treatment of a trust always depends on its terms and the individual circumstances. We advise on German law; questions of US law remain with your US attorney.
Have your trust reviewed — German risk assessment
You send us the trust instrument and any amendments. We tell you in writing how the German tax office is likely to view the trust, where the risks are, and what can still be changed.
- Inheritance and gift tax: transferor, tax class, allowances
- Income tax on distributions and the § 15 AStG attribution risk
- Reporting duties in Germany
- Concrete next steps — for you and for your US attorney or trustee
Watch: I explain it on video
In plain English, from me personally.
Frequently asked questions
Do I pay tax twice — in the US and in Germany?
Not necessarily. The estate tax treaty and German law provide for crediting US estate tax. Whether and how much depends on the case.
How is a US trust treated in Germany?
Often differently than in the US. After the settlor’s death, the German tax office may treat the trust as a separate pool of assets and each distribution as a separate acquisition — sometimes in a less favourable tax class. Income tax and § 15 AStG can also be relevant. This should be checked before anything is paid out. Have your trust reviewed — German risk assessment.
The trust has not been set up yet — or the settlor is still alive. Is it too early?
No — this is the best moment. Before the settlor’s death, the trust terms can often still be adjusted with the US estate planning attorney to take German beneficiaries into account.
The trustee wants to distribute in instalments over several years. Is that a problem?
It can be. From a German perspective, staged distributions may each be a separate taxable acquisition, and the credit for US estate tax is limited in time. Whether this applies depends on the trust terms and your circumstances.
Do I need a US lawyer as well?
For the US probate, usually yes. We work alongside US attorneys and CPAs and handle the German side.
Can we talk in German?
Of course — we advise in German and English.
Let’s look at your situation.
In a free 15-minute call we tell you what applies on the German side and what to clarify with the US advisors.
Nicola S. Casper-Hoesl is admitted to practice law in Germany (Rechtsanwaltskammer München) and has been admitted in Colorado as a Foreign Legal Consultant since 2021. She advises on German law only. Nothing on this website is advice on U.S. federal or state law or U.S. tax matters; please coordinate those with your U.S. attorney or CPA.