Assets: Passing on a portfolio - how to make it easy for your children

In order to pass on a securities deposit to one's heirs, careful planning is essential. The goal is to minimize taxes and ensure that the heirs can access the deposit quickly after the deceased's passing. To achieve this, several preparations should be made, including granting powers of attorney, making early gifts, and transferring the deposit to a single individual rather than an inheritance community.

Katrin Dorn, a tax advisor and partner at Möhrle Happ Luther in Hamburg and Munich, explains that banks often refuse to grant immediate access to a deposit without a death certificate or will that has been opened by the inheritance court. During the period before these documents are available, months may pass, during which market fluctuations could negatively impact the estate's value.

However, the value of the deposit is determined based on the price on the date of death, and the financial administration does not consider any subsequent changes in the market.

To expedite access to the deposit, heirs can receive a power of attorney from the testator in advance. A power of attorney allows the designated person to act on the testator's behalf shortly after their death. However, the power of attorney must be appropriate for banking institutions to recognize it easily. General powers of attorney, even if they cover the period after death and are certified by a notary, may still be subject to bank checks. These checks serve to protect the bank, as an invalid power of attorney could be presented.

Benjamin Hofmann, a wealth manager at Habbel, Pohlig & Partner, recommends obtaining a bank-specific power of attorney. This document grants the authorized person their own online access credentials, enabling them to manage the deposit efficiently. This arrangement is beneficial not only in the event of the testator's death but also when the testator is temporarily unable to manage the deposit themselves.

However, granting a power of attorney also comes with significant responsibilities. Bevollmächtigte (those granted power of attorney) acquire considerable influence, and care should be taken when selecting multiple co-bevollmächtigte, as this can lead to conflicts among the heirs. Moreover, transferring the deposit to an inheritance community may result in unfavorable outcomes, as the surviving heirs can only jointly manage the deposit, which can lead to disputes and hinder decision-making.

In cases where the inheritance is distributed among multiple heirs, a testamentsvollstrecker (executor appointed by the will) may be necessary to ensure a smooth administration of the estate. However, even the executor must first obtain authorization from the bank before gaining access to the deposit. Consequently, the access to the deposit may not be immediate after the testator's passing.

An alternative solution is to allocate a part of the deposit to an "advance legacy" along with the testator's other inheritance share. This would allow the beneficiary to have complete control over this portion. The wealth manager, Hofmann, suggests transferring parts of the deposit or individual securities to other banks or heirs during periods of market downturns. This strategy should be executed without delaying the transfer, as it could lead to missed tax benefits.