Declining German Engagement in Discussions Regarding Inheritance, According to Our Research Findings
In Germany, the landscape of inheritance is undergoing significant changes, reflecting broader shifts in wealth concentration, estate planning behaviour, and the use of inheritances for asset building and retirement.
A recent survey reveals that 34% of future heirs in Germany today anticipate an inheritance of 250,000 euros or more. This trend is closely linked to the increasing concentration of wealth in the country, with the richest 25 individuals/families owning about €440 billion, nearly equivalent to the federal budget.
As wealth becomes more concentrated, the nature of inheritances is also evolving. The super-rich are increasingly likely to pass on high-value assets such as company shares, real estate, and financial assets, rather than simple cash legacies.
The trend towards more strategic estate planning is evident as well. Comparisons with broader Western trends show a rise in people planning to leave inheritances, though this may be more pronounced among younger generations elsewhere. Notably, 42% of testators no longer automatically appoint their spouse as sole heir, a decrease from 59% in 2018.
The growing complexity of inheritance matters has led to a surge in demand for professional advice. Notaries and lawyers are in particularly high demand, with 55% and 17% of testators seeking their advice, respectively.
However, despite the growing importance of inheritances, many Germans are still reluctant to deal with the subject. Two-thirds have yet to give any thought to what should happen to their digital estate after death, and only 35% of potential testators have written a will. This figure is lower among those under 50, with only 14% having a living will and 12% having a healthcare power of attorney.
The average age at which people in Germany write a will is 58, two years older than in 2018. In 2023, the tax offices in Germany assessed inheritances and gifts worth 121.5 billion euros, a record amount.
The increased value of inheritances makes them crucial for asset accumulation and retirement security, particularly as tax and wealth migration factors evolve. Given Germany’s progressive tax rates and capital gains taxes, inheritances can be critical in asset building and retirement planning, especially for middle and upper-middle classes.
Interestingly, 60% of future heirs state that they want to use an inheritance for asset building and retirement planning, an increase from 52% in 2018 and 47% in 2015. This trend is particularly evident among those who have already inherited, with every second German citizen using the inheritance primarily for their own asset building and retirement planning.
The digital age has also introduced new complexities to inheritance matters. Two-thirds of Germans have yet to give any thought to what should happen to their digital estate after death, creating potential challenges for executors and heirs in managing digital assets.
In conclusion, Germany is experiencing increased wealth concentration that shapes inheritance trends, with likely growing complexity in asset types bequeathed and strategic estate planning among the wealthy. While direct data on wills and the broader population’s inheritance behaviour is limited, the economic context suggests that inheritances play a significant role in asset accumulation and retirement security, particularly as tax and wealth migration factors evolve.
In light of these findings, it's evident that an increasing number of wealthy German individuals are favoring the bequeathing of high-value assets such as company shares, real estate, and financial assets, rather than cash legacies. Consequently, the demand for professionals in wealth management and private banking sectors, who specialize in personal-finance and estate planning, is anticipated to rise.
Moreover, as digital assets become a significant part of personal wealth, the need for comprehensive wealth management services that include digital-asset inheritance planning is likely to emerge, given that two-thirds of Germans have yet to consider their digital estate in their inheritance plans.
