German Estate Assets Explained: Life Insurance, Bank Accounts, Real Estate & More

When a person dies in Germany, their entire estate passes automatically to the heirs under the principle of universal succession. This includes not only assets but also debts, contracts, and tax obligations. For heirs in the U.S., this often comes as a shock: while they expect to receive property or bank balances, they also inherit mortgages, loans, and liability risks. Knowing which assets belong to the estate, which do not, and how they are accessed is the first step in protecting value and avoiding costly mistakes.

Whether life insurance proceeds form part of the estate depends on the beneficiary clause:

• Beneficiary designated: The payout bypasses the estate and is paid directly to the beneficiary. The heirs have no claim.
• No beneficiary designated: The claim becomes part of the estate under universal succession.

⚠️ Critical Risk: German case law allows heirs to revoke the deceased’s promise if the beneficiary has not yet been informed. Beneficiaries must act fast and notify the insurer immediately.

💸 Tax Impact: Regardless of who receives the payout, it is subject to German inheritance tax. Personal allowances may reduce exposure, but U.S.-based beneficiaries must also consider double taxation risks.

Pro Tips:

• Review and update beneficiary designations after major life events (e.g., divorce).
• Ensure the executor or heirs have access to policy documents.
• File claims quickly and keep proof of notification.

Shares, ETFs, and bonds automatically transfer to heirs at the time of death. However, banks require proof of heirship—usually through a Certificate of Inheritance (Erbschein) or a notarized will with probate certificate. If multiple heirs exist, unanimous consent is needed for trades or transfers, often freezing portfolios for months.

📉 Valuation & Tax: Securities are valued at their market price on the date of death. Both inheritance tax and compulsory share (Pflichtteil) calculations use this value—even if the market drops afterward.

Best Practice:

• Appoint an executor to manage accounts and avoid deadlocks.
• Consider a durable power of attorney to ensure liquidity.
• Decide early whether to sell or hold—the market won’t wait for family consensus.

Real estate ownership transfers automatically to heirs upon death, but the land register must be updated. Heirs have two years to register the change free of court fees. In heir communities (Erbengemeinschaft), conflicts often arise when some heirs want to keep the property while others demand a sale. If no agreement can be reached, a partition auction may be forced, often resulting in a below-market price.

🏠 Tax Rules: Real estate is valued based on fair market value at the date of death under German valuation law. Spouses and minor children may benefit from residential exemptions, provided they continue to use the family home.

Bank accounts become part of the estate and are immediately frozen until heirs present proof of entitlement. Without an Erbschein or notarized will, funds cannot be accessed. In joint accounts, the surviving co-holder may continue transactions, but must account to the estate for half the balance.

💡 Planning Tip: A transmortal power of attorney ensures continuity of access, allowing accounts to be used after death without waiting for probate.

Safe deposit boxes are part of the estate, but access requires formal proof of heirship. If a will is stored inside, a probate officer may need to supervise the opening. All contents must be disclosed for inheritance tax purposes and included in compulsory share calculations. Concealing assets exposes heirs to joint liability and even criminal consequences.

Heirs inherit not only assets but also debts. This includes mortgages, loans, tax obligations, and even ongoing contractual duties. While heirs can limit their liability to the estate (e.g., through estate administration or insolvency proceedings), failure to act promptly may expose their personal wealth to creditor claims.

For U.S.-based heirs, cross-border estates create additional challenges:

• German banks, insurers, and registries require sworn translations and apostilles for U.S. documents.
• German inheritance tax applies even if the heir lives abroad, based on worldwide assets in certain cases.
• U.S. beneficiaries must coordinate with American tax advisors to avoid double taxation under the U.S.–Germany tax treaty.

1. Collect and secure all policy documents, account statements, and property deeds early.
2. Notify insurers, banks, and tax authorities immediately to prevent revocation or penalties.
3. Obtain an Erbschein or probate certificate quickly to unlock frozen assets.
4. Anticipate tax liabilities and coordinate cross-border filings.
5. Seek professional legal guidance to avoid forced sales or costly disputes.

German inheritance law treats each asset class differently—life insurance, securities, real estate, bank accounts, and even liabilities follow distinct rules. For U.S.-based heirs, the combination of German probate, tax law, and international compliance makes professional guidance essential. Acting quickly, securing proof of heirship, and understanding asset-specific rules ensures you preserve value and protect your rights.

German Attorney Nicola Casper-Hoesl helps international heirs unlock German estate assets—efficiently, legally, and with full cross-border expertise.