This article is adapted from the business magazine Capital and is available here for ten days. Afterwards it will only be available to read at www.capital.de. Like stern, Capital belongs to RTL Deutschland.
Death, it is said, makes all people equal. But from a financial perspective this does not seem to be the case at all. The well-known phenomena of the wage gap, pension gap and lifetime income gap between the sexes are now widely discussed. But have you ever heard of the inheritance and gift gap? Probably not. At the same time, it is not surprising that they exist.
The amount of the tax exemption and the inheritance or gift tax varies depending on the relationship between the testator and the heir or heir. But there are differences not only in tax terms. The amount of inherited wealth also varies significantly – and these differences do not always only come from the state.
There are interesting cultural differences when it comes to dealing with money and inheritance. In the USA, it is perfectly normal to flaunt one’s wealth. It is also used to draw attention to certain issues, for example through fundraising galas, appeals for donations or foundation work. A large part of the inheritance is often passed on to descendants during one’s lifetime or donated to charitable causes. At the end of life, there is not much left to pass on.
In Germany, wealth tends to be kept hidden; people don’t want to attract too much attention, because as we say, we don’t talk about money! The descendants may receive a small gift during their lifetime, but the majority is often kept secret until the end of their lives and only comes to light when the will is opened.
The saying goes: In the USA you live rich as Croesus and die poor as a church mouse. In Germany it’s the other way around: live like a church mouse, die like Croesus.
The gender inheritance gap is also notable. Unfortunately, the gender gaps mentioned above do not end with death. On average, daughters inherit 13 percent less than sons, while the difference in gifts (i.e. inheritances during their lifetime) is as high as 37 percent. This is mainly because companies and business assets are more often transferred to sons, even during their lifetime. This means they have more time to increase their assets. Daughters, on the other hand, usually receive traditional inheritances much later in life, which are often worth less and are taxed higher.
As an example: The son inherits the business, the daughter a stock portfolio – if there is one. The business will be handed over when the father retires, hopefully many years before his death. From this point on, the son has the opportunity to increase his inheritance. This business, with all its future income, is worth much more and has little to no tax to pay than the stock portfolio that goes to the daughter when the parents die.
In plain language this means: Daughters receive less money later in life and have to hand over more of it to the tax authorities than sons!
The good news is that every person can help narrow the inheritance and gift gap between the sexes. It is important to make thoughtful decisions and talk openly about financial matters, including with older generations. This has nothing to do with selfishness or greed, but rather with clever, solid and cross-generational financial planning. Of course, depending on the family DNA, the inhibition threshold can be high, especially if the maxim has previously been “Don’t talk about money.” It takes courage and openness, but it’s worth it.
