Inheritance tax in Karlsruhe: Why your will deserves a second look, but not a hasty decision

Anyone who thinks about wealth that should remain rarely thinks in statutes. They think of the house in which the children grew up, of a portfolio that has grown over a working life, of a business, of names and of promises.

What is being negotiated in Karlsruhe

The Bundesverfassungsgericht has scheduled two oral hearings. On 12 October 2026 it concerns the application of the Bavarian State Government (1 BvF 1/23). It considers the provisions on the valuation of real property, the personal allowances and the tax rates to be formally unconstitutional because the federal government lacks legislative competence. It also objects that the allowances and tax rates have not been adjusted for the price increases of recent years and do not take the regionally varying level of property prices into account.

On 13 October the constitutional complaint 1 BvR 804/22 follows. The complainant inherited solely private assets from his aunt, including a securities portfolio and real estate. He wishes to have clarified whether the exemptions for business assets disadvantage him in an unconstitutional manner.

What does not yet follow from this

A hearing is not a judgment. Until a decision is made, the current regulations continue to apply. According to KPMG, the period between hearing and pronouncement is usually four to five months, so a judgment later this year is unlikely. This is a forecast and not a guarantee from the court.

The personal allowances are currently €500,000 for spouses and civil partners, €400,000 for children and €200,000 for grandchildren. They originate from the 2009 reform, previously they were considerably lower. Whether and how the legislature will adjust them is uncertain.

Why we advise restraint

It may seem tempting to make gifts now before anything changes. Experts urge caution: purely tax‑motivated rapid transfers can have civil, income‑tax and family disadvantages. Whoever gifts relinquishes control, and this cannot be undone without consequences.

That the temptation remains strong is explained by a well‑described principle of behavioural economics, loss aversion. A looming loss feels subjectively heavier than an equally sized gain, and uncertainty quickly creates pressure to act. This is an explanatory approach and not evidence for an individual case.

What is worthwhile instead

The debate is a good occasion to reread a will or a transfer agreement drafted years ago. Who should receive the house, and who decides in the inheritance community when there is disagreement? Are siblings treated unequally, and is the reason explained? Is a business organised such that succession does not fail due to a tax issue? These questions remain pertinent, regardless of how Karlsruhe decides.

A will that saves tax but divides siblings has missed its aim. Therefore, at Kanzlei Bohn we combine the legal review with a view of the family as a whole and, where necessary, with mediation before a succession issue becomes a dispute. We will keep this article updated after the hearings.

This article provides general information and does not replace individual legal advice.

As of 20 September 2026.

Sources: Bundesverfassungsgericht, press releases 48 and 49/2026; STB Web; BMF-Erbschaftsteuerhandbuch (§ 16 ErbStG); KPMG; HLB Schumacher; Möhrle Happ Luther.