Inheritance to Nonprofit Organizations in Germany

The German Civil Code (Bürgerliche Gesetzbuch, BGB) permits a handwritten and signed will. This does not require a notary's office or legal advice. The question is, however, which wording is used in the will to actually do good.

Smaller organizations with only a few employees or even volunteers are often overwhelmed by inheritances when they assume the rights and obligations of the deceased as heirs.

An example: A person has been involved in a local association all their life and now wants to leave a property to the association in their will. However, the will includes other persons in addition to the association. In case of doubt, the association as a legal entity is then part of a joint heirship alongside one or more natural persons and must agree on how to deal with the property in the event of inheritance:

• Should it be sold?
• If so, at what price?
• Who will take care of the sale?
• Who will take care of the ongoing management of the property?

Even if the association is appointed sole heir, this can be a lot of work and tie up the organization's capacity for this administrative work.

A more practical solution is to make a will in which the charitable organization receives an asset or even the entire estate not as an inheritance but as a bequest.

The choice of words is important here: Formulations such as “I bequeath my entire estate to...” are interpreted as the appointment of an heir, whereas the formulation “... and I bequeath this object to...” can mean a legacy.

At this point, it makes sense to seek legal advice in order to find the most suitable wording for the will for the individual's assets and the respective components together with the person who really wants to do good. Ideally, coordination with the nonprofit organization should also take place in good time during their lifetime. Here too, legal advice can help to find the right solution together.

Of course, you can decide what your assets are used for at the nonprofit organization - the organization must always comply with the commitment to the purposes in the articles of association. You can also specify the restriction of use to certain purposes, to contributions to the asset pool or even to certain projects. The right wording is also important here.

There are also constellations in which shares of assets are given away before the death of the deceased. If the benefactor gives away part of their assets, the person should keep an eye on the heirs entitled to a compulsory portion. Depending on the circumstances of the individual case, the person entitled to a compulsory portion may have a claim for repayment against the charitable organization if the benefactor dies before ten years have passed since the gift was made.

Tax optimization also plays a role in the decision to “bequeath or give away”, depending on whether it is “only” a matter of recognizing special expenses or a donation to the asset pool of a foundation.