Your client’s trust, reviewed from the German side.
When a settlor or beneficiary has ties to Germany, a trust that is well drafted under US law can still produce German inheritance tax, income tax and reporting consequences. I review the trust instrument and tell you — in writing, in English — how the German tax office is likely to see it and what can still be done.
Rechtsanwältin · Foreign Legal Consultant (Colorado)OfficesColorado, US & Bavaria, Germany
Six situations that should trigger a German review
A beneficiary lives in Germany
Distributions to a German resident can be taxable acquisitions in Germany — independently of the US estate tax position.
The settlor has German ties
German nationals keep an extended unlimited German tax liability for five years after leaving Germany, and a German resident settlor makes the whole estate taxable.
German assets in the trust
German real estate or business assets held in trust are subject to German tax even if nobody involved lives in Germany.
A trustee or protector in Germany
Management from Germany can make the trust itself subject to German tax.
Staged or discretionary distributions
From a German perspective, each distribution may be a separate acquisition — allowances are used up and the credit for US estate tax is limited in time.
The settlor is still alive
The best moment: amendments made now — by you, with German input — can often avoid the most expensive outcomes for the family.
The German questions, answered for your file
Short, structured and written for a US professional reader — with the German statutory references, so it can sit in your file or go to the client.
- Is the trust transparent or a separate pool of assets under German law (§ 3(2) no. 1, § 7(1) nos. 8, 9 ErbStG)?
- Who counts as transferor — and which tax class and allowance apply (§§ 15, 16 ErbStG)?
- Credit for US estate tax: treaty and § 21 ErbStG, including timing
- Income tax on distributions (§ 20(1) no. 9 EStG) and attribution of trust income (§ 15 AStG)
- Place of management risk for trustees in Germany (§ 10 AO)
- German reporting duties and deadlines (§ 30 ErbStG)
- A risk rating and concrete options: amendments, timing and form of distributions, binding ruling (§ 89(2) AO)
Three steps, clear fees
Send the documents
Trust instrument, amendments and a short note on the family: who lives where, and which assets are involved.
Written memo
You receive the German-law assessment with a risk rating and recommendations. The timeframe is agreed in advance.
Call and follow-up
We walk you — and, if you wish, your client — through the result. Any follow-up work in Germany is quoted separately.
Questions from US professionals
Will you advise my client on US matters?
No. I advise on German law only. You remain the client’s US attorney, trustee or CPA, and I coordinate with you on everything that touches US law.
Who is the client for the trust review?
That depends on the case: the engagement can be with your client directly or with your firm. We agree this at the start.
How are fees calculated?
After a first look at the trust instrument, we quote the fee for the written assessment in advance — depending on the structure of the trust and the facts. Additional work, such as drafting language for amendments, a binding ruling application or German tax filings, is quoted separately in advance.
Can the memo go to my client?
Yes. It is written in English for a non-German reader, and can be forwarded to your client.
Do you also handle the German estate itself?
Yes. We handle German probate (Erbschein), German inheritance tax returns and the transfer of German assets — together with our partner office Rechtsanwälte Hösl & Dr. Hösl in Miesbach, Bavaria. More for professionals.
Have a trust with German ties on your desk?
Send it over. You get a clear German-law answer, in English, with the fee agreed in advance.
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.
General information, not tax or legal advice. The German treatment of a trust always depends on its terms and the individual circumstances.