What is a trust?

The trustee is the heir appointed by operation of law or by virtue of a disposition of property upon death who is limited in his or her disposition of the inheritance by the disposition of the estate. The trust terminates when the beneficiary event occurs, i.e. the inheritance passes to the beneficiary (Section 2139 of the German Civil Code). In principle, the testator/settlor is free to determine the point in time at which the inheritance should pass from the trust heir to the beneficiary. If he does not determine a point in time, the inheritance passes to the pbeneficiary heir upon the death of the fiduciary heir. If the testator has designated as a subsequent heir a person who has not yet been conceived, the inheritance accrues to him at the time of his birth (§ 2106 BGB). If the testator has specified a time at which the heir is to receive the inheritance, but has not specified who is to be the heir in the meantime, the testator’s legal heirs are deemed to be the fiduciary heirs (§ 2105 para. 1 BGB). The fiduciary assumes the entire legal status of the deceased at the time of inheritance and can therefore in principle also dispose of the objects belonging to the inheritance as a full heir. In order to preserve the inheritance as little as possible for the heir-beneficiary, the trustee is limited in his free power of disposal. In principle, the predecessor heir retains unlimited use of the estate, but may not dispose of real estate or make gratuitous gifts. However, the testator may exempt the predecessor from such restrictions. This is a released fiduciary. Our attorneys specializing in inheritance law in Frankfurt will be pleased to assist you with all your questions.

When does a trust make sense?

A trust always makes sense if the testator wants to ensure that his inheritance passes to another person after the death of the trustee or at a time determined by him. Because of the binding effects contained in the prior and subsequent inheritance, it is also possible to make disqualified wills through the prior and subsequent inheritance. Through prior inheritance, a person entitled to a compulsory share receives more than his or her compulsory share. The disclaimer is very personal and cannot be performed by a social welfare institution. However, due to the high welfare and social costs, the binding effect means that the estate cannot be reduced, so that access to substance is not possible.

How to get rid of a trust in Frankfurt?

The prior inheritance is also a restriction that offers the beneficiary of the compulsory portion the possibility to renounce the prior inheritance in order to receive his or her compulsory portion in accordance with Section 2306 of the German Civil Code.

What are the advantages of the trust?

The advantages of the trust lie in the possibility of the testator to appoint an heir without passing over another in the inheritance. The popular application lies in the reciprocal designation of the spouses as preinheritors and of the respective children of the spouses as subsequent heirs, provided that they are not common children. It makes it possible for the family estate to remain in the family without passing over the spouse in the process.

What are the disadvantages of the trust?

The disadvantage of the trust lies in the lack of commitment. Thus, only in the case of real property is there a relative assurance that this property will not be seized from the beneficiary heir. A released trust heir is in fact considered as a full heir. The beneficiary heir has hardly any possibility to influence the use of the inheritance property by the fiduciary heir. What matters here is the correct use of pre- and post-inheritance in relation to other regulations. In this way, certain loopholes and deficiencies can be avoided.

What happens to the right to a compulsory portion in the case of a trust?

By renouncing the inheritance, the one entitled to the compulsory share who is designated as the beneficiary heir may nevertheless claim his compulsory share due to the limitations imposed on him by the prior inheritance. The testator must also take this into account when using the prior and subsequent inheritance. Do not hesitate to contact your Frankfurt lawyer and take advantage of his advice on this subject.  

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