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Germany

Aging population means German state inherits more

What happens to people's assets if they don't not have any heirs? In such cases, the state in Germany, by law, cannot refuse the inheritance. But the legacy is not always golden.

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The German state inherits when there are no heirs

You cannot argue with the demographic reality: Germany as a nation is getting older. Many of the elderly live by themselves after their spouses die. And what's more, the number of people without children or relatives is also growing.

About 170,000 people who live by themselves die every year in Germany. In these cases, the cities and towns take care of burials and other formalities - including what to do with the deceased's estate. Not everyone who dies alone in Germany is without means at life's end. Whatever wealth remains after the burial goes to the state.

Court-appointed heir

The deceased's local court is responsible for overseeing his or her estate. If after extensive inquiries the court determines there are no heirs in the deceased's will and no close relatives, then - for example in the state of North Rhine-Westphalia - the court will name councilor Thomas Peperhove an heir. Peperhove is responsible for fiscal legacies in the region of Arnsberg in North Rhine-Westphalia, Germany's most populous state.

The state takes over when their are no heirs

The state takes over when their are no heirs

"As a rule, we get the things for which there are no heirs," Peperhove said. "But there are many other cases in which the heirs refuse the inheritance, because they know they would inherit debts otherwise."

Whatever inheritance lands on his desk, Peperhove cannot reject it. "There are statutory regulations that obligate the state, insofar as there are no heirs, to accept inheritances," he said.

Not every inheritance pays

In many cases, the state can do little with the inheritances that come its way. They often include collapsed warehouses, ruins from fires and uninhabitable homes. Peperhove and his four colleagues do not want to sit on such inheritances for long, since managing them costs money - and that comes at taxpayers' expense. "We cannot let such properties stay abandoned in the region," Peperhove said. "They have to be cared for so no danger can come from them."

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The number of unclaimed inheritances is on the rise

Peperhove and his team have a lot to do, with the amount of so-called junk property having doubled over the last ten years. But even when property appreciates in value, there can also be problems.

"Sometimes we inherit portions of property," Peperhove said. "And these [involve] a large group of heirs we must first deal with."

The councilor added that such groups ask whether he would be ready to take over all the shares in the property he partially inherited.

International complications

Along with such problems, government inheritances occasionally bring about strokes of luck. "This year we had an inheritance in the amount of 1.2 million euros," Peperhove said, "although we intensely looked for an heir for two years."

The fiscal legacies department of the Arnsberg government cannot complain about a lack of work. In 2001, the office dealt with 96 inheritances, while 2011 saw 246 cases. Peperhove said the trend is continuing. "Up to the end of July, we had 180 cases," he explained. "If this continues, we could possibly broach the 300 mark this year for the first time ever."

Peperhove said not many of these inheritances are junk. "We have a few nice things," he added, "holiday homes in Spain or apartments in France" and a sailboat harbored in Portugal.

Many Germans spend their last years in southern climates. That ultimately means more work for Peperhove. "There is the question of what inheritance laws may be applicable," he said. "We are currently in contact with the German embassy in Lisbon, and have to see how things progress."

Inheritances from people with no heirs cannot make up for German states' steep budget shortfalls. In Arnsberg alone, there was a 900 euro surplus in 2011.

German states have to accept every inheritance bequeathed them, but in one respect, they are better off than German citizens who receive inheritances; the state does not have to pay any taxes, Peperhove pointed out, unable to conceal a grin as he did so.

"It would be a bit silly if the state itself had to pay a tax," he said, "since it all ends up in the same drawer."

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