Those who inherit a "fat" share portfolio often have to be annoyed instead of happy at the moment.

Namely when, as the heir, an immense back-payment of inheritance tax flutters into the house.

The reason: The tax office calculates the tax on the day of the death of the generous testator.

But it is well known that a lot of time passes before the heir can finally dispose of the deposit - time in which share prices can fall rapidly.

The fatal consequence: in the worst case scenario, the heir has to pay more taxes than his shares are worth at all.

This was not an isolated case on the Neuer Markt.

Delivered to the market

An example: Max Clever increases his fortune to an impressive 1.5 million marks through clever purchases on the Neuer Markt.

He dies at the beginning of March 2000 when stocks on the Neuer Markt are just about to peak.

The deceased no longer has to witness the bitter decline, but his grandson Theo Traurig does.

The inheritance drags on for months, the prices plunge into the abyss and sad cannot save a penny.

When he finally holds the certificate of inheritance in his hands, the share portfolio has melted down to a meager 120,000 marks.

The tax authorities, however, sent him a tax assessment for a staggering 266,000 marks in inheritance tax.

Damage incurred: 146,000 marks (see also the example calculation in the link “Balance of an inheritance”).

Two strategies

Anyone who does not want to be left with empty pockets after such a scenario has two options: they can turn down the inheritance or apply for a waiver of inheritance tax.

There is not much time left for the first path - just six weeks from the time the heir found out about it or a will was opened.

He would also use it to turn down other assets, if any.

In such a case, tax experts recommend filing an application for exemption from inheritance tax.

The tax authorities grant this in full or in part if it were “unreasonable” to demand the tax from the heir.

Such reasons exist when the economic existence of the taxpayer is seriously jeopardized.

One then speaks of a need for remission.

Two judgments from tax courts

An unreasonable tax claim is also given if the person concerned has not put himself in dire straits (exemption). In addition, the inheritance tax burdens the heir excessively and fundamentally affects his property. A decree is generally appropriate if the inheritance tax makes up more than half of the property.

Heirs should justify their application for tax waiver with the second option, the waiver. And it is essential to point out that the heirs were not able to access the custody account due to the lack of a certificate of inheritance when the share prices plummeted. The Cologne Finance Court (file number 9 K 3954/89) and the Federal Finance Court (share number II R 98/97) have already granted similar applications. Justification of the judges: "The heir could not prevent the decline in the price of his inherited property due to a lack of actual power of disposal neither by selling nor by other measures."