What happens to my ETF when I die?
Your ETF does not disappear and is not automatically sold when you die. It is part of your estate and passes to your heirs, who take over the securities account and the holdings as they are. Two things matter: how heirs gain access to the account, and how the gains and the inheritance are taxed.
The short answer
An ETF is segregated fund property held in your securities account (Depot). On death it becomes part of your estate and transfers to your heirs — typically the shares are transferred in kind, not liquidated, so your heirs receive the ETF units themselves and can keep or sell them. The broker freezes the account until the heirs prove their entitlement.
To take over the holdings, heirs present a death certificate plus proof of inheritance — a will, a certificate of inheritance (Erbschein in Germany / Einantwortungsbeschluss in Austria) or, for many brokers, a notarised will is enough. The broker then re-registers the Depot in the heirs’ names.
What about the capital-gains tax on the ETF?
Good news for heirs: death itself does not trigger capital-gains tax on the ETF. In Germany and Austria the heir takes over the original acquisition cost (the price you originally paid). The latent gain carries over and is only taxed if and when the heir later sells — at that point on the full gain since your purchase. There is no ‘step-up’ to the value at the date of death.
Keep them apart: (1) capital-gains tax — not due on inheritance, only on a later sale by the heir; (2) inheritance tax — a separate tax on the value transferred, with country-specific allowances. Many heirs pay neither, thanks to high allowances.
Inheritance tax: Germany vs Austria
- Germany: inheritance tax applies, but with high personal allowances — €500,000 for a spouse, €400,000 per child, €20,000 for more distant heirs. The ETF is valued at the market price on the date of death. Most family inheritances stay within the allowance.
- Austria: there has been no inheritance tax since 2008 — inheriting an ETF is tax-free at the moment of transfer. The carried-over KESt cost basis still applies to a later sale.
- Cross-border: if assets, the deceased or the heir sit in different countries, double-taxation and reporting rules can apply — worth professional advice for larger estates.
How to make it easy for your heirs
A few practical steps remove most of the friction: keep a list of your brokers and accounts where your heirs can find it, consider a clear will so no certificate of inheritance is needed, and check whether your broker offers a joint account or a transfer-on-death arrangement. Without any documentation, heirs may not even know an ETF exists — the most common real-world problem is not tax, but lost accounts.
FAQ — ETFs and inheritance
Is my ETF sold automatically when I die?
No. The ETF units are normally transferred in kind to your heirs, who can then decide to keep or sell them. The broker freezes the account until the heirs prove their entitlement with a death certificate and proof of inheritance.
Do my heirs pay capital-gains tax when they inherit?
Not on the inheritance itself. In Germany and Austria the heir takes over your original purchase price as the cost basis. Capital-gains tax is only due if the heir later sells, calculated on the full gain since your original purchase — there is no step-up to the date-of-death value.
How much inheritance tax is due on an ETF in Germany?
It depends on the relationship and the value. Allowances are €500,000 for a spouse, €400,000 per child and €20,000 for distant heirs. The ETF is valued at its market price on the date of death; amounts within the allowance are tax-free.
What should I do now to protect my heirs?
Keep an up-to-date list of your brokers and accounts somewhere your heirs can find it, write a clear will, and check whether your broker offers a joint or transfer-on-death account. The biggest practical risk is heirs not knowing the ETF exists.