Nothing is better than giving. However, you should note a few things to make the gift for your children tax free. There are grants for donations that you should take advantage of.
Supplement for gifts for children
A tax-free allowance of € 400,000 applies to gifts for your children. This amount can be used every 10 years to make tax-free gifts for the kids. The size of the supplement for gifts is equal to the supplement for an inheritance.
With donations from both parents, the allowance is doubled, as each parent can individually donate € 400,000 from their own assets. The gifted child can receive up to € 800,000 tax free.
Example: gifts for children from both parents
You want to give your child your property worth € 600,000. Due to the allowance, € 400,000 is tax free. However, the difference of € 200,000 is taxable. If you and your spouse or registered partner are listed in the land register in equal parts, you can each make donations of up to € 400,000. In this case, the donation remains tax free.
What are chain gifts?
The important thing here is that everyone can only donate their own property. Many people try to avoid this problem with chain gifts: For example, you give your spouse property, which he in turn gives to the child. These chain gifts are only permitted if there is no obligation on the first recipient to forward the gift and there is a sufficient amount of time between the gifts. If these happen at the same time, the tax office suspects a detour gift with a view to tax evasion.
gifts for grandchildren
Orphaned children are also entitled to the € 400,000 benefit. Otherwise, grandparents can give tax-free gifts to their grandchildren of € 200,000.
However, the option to give the money away tax-free only exists every 10 years. If you are in the fortunate situation of having a very large fortune, you can make a gift plan and start making gifts well in advance by using the supplements.
Gifts for Kids: Legally Beneficial Gifts
Donations must also be accepted by the recipient.
A contribution by which someone enriches another from his or her property is a gift if both parties agree that the contribution is free.
§ 516 I BGB
Minors have limited legal capacity from the age of 7 to adulthood. In the case of a donation, they must be duly represented by their parents.
Only in the case of legally beneficial donations is representation not required. This is the case if no obligations arise from the donation, eg if the minor does not enter into existing tenancy or leasing conditions when a property is donated.
In the case of donations to own minor children, there is another special feature to take into account: A supplementary guardian appointed by the family court (a person appointed by the court to take on part of the parental care for a minor child) may have to consider whether the donation is in the best interests of the child.
Parents would otherwise decide on their own donation as legal representatives for their children. This is to prevent the child receiving the gift from suffering legal inconvenience as a result of the gift. Disadvantages are, for example, obligations under the duty legislation, as they are found in a rented apartment.
Gifts for children as a legacy throughout life
If your donations to children serve to pay out the inheritance in full during your lifetime, you must note this in writing when giving the gift. If there is no corresponding disposition or a disposition written after the donation, the child who has received the gift is still entitled to the so-called compulsory portion.
Crediting of gifts to children for inheritance
If the inheritance takes place before the 10-year period has expired, the donation will be allocated in proportion to the inheritance according to the liquidation model. However, the value to be credited is reduced by 1/10 for each past year.
The same principle in the reduction model applies to the determination of the so-called additional right to a compulsory share.
Can you claim gifts given to children back?
In some cases, a recovery claim is possible within 10 years.
These cases include:
- You become impoverished after the donation and can no longer earn a living.
- Upon receipt of transfer payments (expenses for keyword care), the National Board of Health and Welfare can also claim the donations back (social bodies are institutions governed by public law that provide social services).
- In the case of “gross ungratefulness” on the part of the recipient, this presupposes a criminal act on the part of the recipient towards the donor or relatives of the donor.
A donation may be revoked if the recipient is guilty of gross ungratefulness through serious misconduct towards the donor or a close relative of the donor.
§ 530 I BGB
Especially with large donations, you can avoid high tax burdens for the recipient by planning and making partial donations.
If you want to make gifts for children, first figure out how much money you need to spend to live for …
Image source: Getty Images / kate_sept2004
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