When an Estate Becomes a Test of Strength

Dr. Peters, what are the most common situations clients come to you with?

There are two typical starting points.

The first: Investors or private property owners, usually of advanced age, realize that they can no longer put off addressing the issue of succession; rather, they need to face it head-on and settle their estate. Often there are several children, and sometimes complex family structures such as blended families. The challenges then lie in issues such as claims to a statutory share of the estate and the necessary liquidity to fulfill them, or in the distribution of existing assets. This is because large estates often cannot be easily divided or have significantly differing market values; this is particularly evident time and again with real estate or businesses. Ultimately, therefore, the focus is on succession planning and its structuring.

The second scenario is significantly more contentious: the inheritance has already been distributed. Several children form a community of heirs, are at odds with one another, and in some cases no longer speak to one another. In this phase, long-standing family tensions come to the surface. On the surface, the issue is about assets, but in reality it is often about recognition, fairness, or old conflicts that have been smoldering unspoken beneath the surface for years.

That sounds less like law and more like mediation.

The two go hand in hand.

While legal proceedings do produce a formal decision, they often leave behind winners and losers, both financially and personally. My approach is therefore initially one of mediation. I try to clarify what the parties are actually concerned about and whether there is still room for an amicable solution. In many cases, this is possible once the motives are laid bare.

What role does real estate play in these conflicts?

A very significant one. Real estate is emotionally charged and economically significant at the same time. Unlike financial assets, it cannot simply be divided. In addition, many parents naturally assume that their children will want to use the family home themselves later on. In practice, this is often not the case. The next generation’s life plans are different; their center of life is often in another city, if not another country. Long-term, almost lifelong planning centered on owning property in one place is changing today and competing with flexibility and mobility “with minimal baggage.”

Without clear arrangements, the property quickly becomes a major point of contention. Yet much of this could be avoided if discussions were held early on about whether a sale, a lifetime transfer, or another structure makes sense.

Why are these matters so rarely addressed in a timely manner?

Due to a lack of courage to tackle the issue. The explanations and justifications are numerous and varied, but ultimately the reason is very human: The topic of succession goes hand in hand with one’s own end of life, and this is not a pleasant thought. So the topic is put on the back burner and postponed until later—after all, there is still plenty of time. The benchmark for this timeline is often statistical life expectancy or family role models. However, unplanned events such as accidents are often forgotten. We all drive on the highway, and each of us has experienced situations where things got tight because another driver made a mistake that nearly caused an accident. A succession can therefore occur at any time. Without a will or powers of attorney, uncertainty arises immediately in an emergency. Even access to bank accounts is not automatically guaranteed.

Those who plan early create clarity and significantly reduce the potential for conflict.

What does it cost if no agreement is reached?

Significantly more than many people assume.

In contentious proceedings, ten to fifteen percent of the estate’s value can quickly be spent on court, attorney, and expert fees. With larger real estate holdings, these amounts add up significantly. Added to this is the depreciation of the real estate itself over time due to a lack of options for action and uncertainty.

How does a community of heirs work in practice?

A community of heirs is a temporary partnership of convenience; it is designed for the division of the estate, not for the long term.

All co-heirs must agree on fundamental decisions, from sales to maintenance measures. This requires a willingness to cooperate. If this is lacking, the emotional and financial pressure increases. In the end, there are usually three options: sale, acquisition by a co-heir in exchange for compensation, or—in the case of multi-family homes or larger real estate portfolios—a division of assets.

The longer the decision-making process takes, the greater the risk of financial disadvantages.

Why is this topic particularly relevant right now?

Because a generation is passing on assets that built up significant real estate wealth during the post-war decades. Many of these owners are now over 80 years old. Single-family homes, apartment buildings, vacation properties—all types of real estate will change hands in the near future.

This transfer of assets is not an abstract concept, but a real trend in the real estate market. Where planning begins early, the transition proceeds in an organized manner. Where it does not, conflicts, delays, and economic friction losses with financial setbacks arise.

What advice would you like to give to property owners?

Every succession can be structured.

A will can be amended as life circumstances change. There are tools such as lifetime transfers, right of residence, or usufruct that combine security and clarity. The key is to simply get started.

Anyone who has built up assets should also structure their transfer. This not only protects the economic value but often preserves family harmony as well.