Inheriting a medical practice: what your heirs (might) get

The Gnadenquartal (grace quarter) - the countdown hardly any doctor knows about

The Gnadenquartal is the period that the Kassenärztliche Vereinigung (KV, the regional association of statutory-health-insurance physicians) grants the heirs of a deceased contract physician to keep the practice running through a deputy, find a licensed successor and initiate the succession procedure - at most until the end of the quarter that follows the quarter of death. The term sounds like a well-meaning concession. In practice it is a tightly bounded window of often well under six months.

Three things have to come together in that time. First, a licensed deputy who keeps care running. Second, a timely application for the succession procedure under § 103 SGB V - with all its formal hurdles. Third, a buyer who takes over the advertised seat. In closed planning areas the admission committee of the KV decides on the selection; the heir has no right of proposal there.

That is the core of the problem: in the succession procedure the seller has no voting right. You cannot decide who takes over the seat, and you cannot simply pick the highest bidder. The KV decides on criteria such as suitability, care situation and order of applications.

The Federal Social Court (Bundessozialgericht, BSG) clarified in its ruling of 11 December 2013 (case no. B 6 KA 49/12 R): the admission of a doctor by way of practice succession presupposes the existence of a practice capable of being continued. The decisive point in time is when the succession is applied for. Anyone who lets the Gnadenquartal slip by without applying to the KV loses both the panel-doctor seat and the right to the entire succession procedure.

In rural and structurally weak regions there is an additional problem: for a large share of the family-doctor seats there are simply no applicants left. Someone who dies in such a position leaves behind an asset that, in effect, no one picks up. That is why effective protection starts long before the worst case - how much lead time is needed is shown in the piece on why early succession planning decides the value.

The BSG tightened this further in its order of 5 June 2013 (case no. B 6 KA 2/13 B): if the contract-physician activity is not exercised for a prolonged period, the practice value can be reduced or fall away entirely. In the decided case a psychotherapist had not treated any patients for over four years - the practice capable of being continued no longer existed, and the claim to a public tender failed. Translated to the inheritance case: if no deputy arrangement kicks in and the practice stands still for months, the patient base decays - and with it the economic core of the practice value.

Immediate duties of the heirs: staff, patient files, ongoing costs

Alongside the race for a deputy and succession, obligations continue from hour one that many families underestimate. The employment contracts of the practice staff do not end with the death of the owner - they pass to the heirs, along with continued pay, notice periods and social-security contributions. Rent, leasing instalments for equipment and ongoing contracts continue and eat into the estate as long as no income flows.

There is also a duty that hardly anyone thinks of in the midst of grief: patient records must be kept for ten years after the end of treatment (§ 630f (3) BGB), unless other rules provide for longer periods. The heirs must arrange for data-protection-compliant storage or an orderly handover to the successor - even if the practice has long been closed. A deputy arrangement that kicks in early secures the patient base in this phase and at the same time the ongoing income from which staff and fixed costs can be covered.

Practice case from my advisory work: internal-medicine practice after a stroke

An anonymised case from my doctor-client practice in the Frankfurt area shows the pattern concretely. A 58-year-old internist running a single-handed practice (around 1,400 cases per quarter, estimated practice value EUR 480,000 plus equipment EUR 80,000) suffered a severe stroke. The widow was a teacher, the two daughters were studying architecture and law - no medical licence (Approbation, the German state licence to practise medicine) in the family. No one was familiar with the practice.

Three phases ran in parallel. In the first two weeks the family looked for a deputy themselves - via professional networks, KV enquiries, a friendly colleague. The KV pointed to the formal application procedure but held back on the search for applicants. We were brought in during week three. First measure: a written deputy arrangement with a neighbouring internist partnership (BAG, Berufsausübungsgemeinschaft) for six months, fee paid from the ongoing KV billings. Second measure: immediate application for the succession procedure at the admission committee, with a valuation report under the modified earnings-value method (modifizierte Ertragswertmethode, the German standard practice-valuation approach). Third measure: targeted approach to applicants via the KV and a practice-brokerage specialist.

The result after six months: three applicants, sale to a young internist from the MVZ (Medizinisches Versorgungszentrum, a German multidisciplinary medical-care centre) sector for EUR 410,000 - around 85 percent of the valuation, reduced because of the three-month deputy phase and a slight loss of patients. Had we lost the first three weeks, KV data showed the patient base would have dropped a further 35 percent; the practice value would have fallen to EUR 220,000 to EUR 260,000. The difference: roughly EUR 180,000 saved, solely through the early deputy mandate and the timely KV application.

In my work with doctor clients this is the most common mistake: the family starts the search for applicants instead of first securing the practice cover. Running both in parallel is the only way to use the Gnadenquartal sensibly.

The Berufsträgerklausel (professional-status clause) - why your children often cannot take over the practice

A further doctor-specific mechanism: the medical profession may be practised only by those who hold the Approbation (§ 2 Bundesärzteordnung - the Federal Medical Practitioners Act). That means: even if your children legally inherit the practice, they may run it only if they are themselves doctors. The model professional code of the doctors (Musterberufsordnung der Ärzte, MBO-Ä) tightens this for collaboration: non-professionals may not be involved in the medical practice or in the income from medical activity.

What many see as an elegant solution - a silent participation of the non-licensed child in the practice - is therefore impermissible under professional law. Indirect structures that give non-professionals a share in the medical income are also excluded.

The equalisation-payment trap

The usual solution in doctor families with mixed children (one child a doctor, one not) is so-called equalisation payments (Gleichstellungsgelder). The licensed child takes over the practice, the non-licensed child receives a cash amount of corresponding value. So far, so logical.

In tax terms a trap appears here that costs many families six-figure sums: if the licensed child pays the equalisation amount directly to the non-licensed sibling, the payment falls into gift-tax class II. The personal allowance there is only EUR 20,000 instead of EUR 400,000 per parent (§ 16 ErbStG). On an equalisation sum of EUR 300,000, gift tax of EUR 60,000 to EUR 80,000 quickly arises, which with proper structuring would not have arisen at all.

Which personal allowances and tax rates apply to each degree of relationship is summarised in the inheritance-tax table 2026 with personal allowances and tax classes.

The clean route runs through the parents: during their lifetime they make gifts to the non-licensed child in the amount of the later practice transfer. These fall into tax class I with a EUR 400,000 personal allowance per parent, reusable every ten years (§ 14 ErbStG). With two parents and staggered gifts, often EUR 800,000 and more per child can be transferred tax-free over the years.

Three structures that keep the practice value in the family

There is no single step that covers all risks - but three structural building blocks that should be set up jointly in every doctor family.

Building block 1: will with practice clause and executor (Testamentsvollstrecker)

A simple Berliner Testament (reciprocal will between spouses, § 2269 BGB) is not enough for a medical practice. You need an express practice clause that regulates:

• who manages the practice in trust until a licensed successor is in place
• which powers the Testamentsvollstrecker (executor appointed to administer the will) receives (KV application, choice of deputy, sale negotiations)
• in what ratio the practice value and the remaining assets are divided among the heirs - especially when not all children are doctors

The executor should ideally be someone with sector knowledge: a tax adviser with doctor clients or a specialised lawyer. The §§ 2197 ff. BGB govern the appointment; the actual practice administration must be clearly defined, so that the Gnadenquartal is not lost to internal disputes among the heirs.

Building block 2: KV power of attorney and deputy arrangement during the owner's lifetime

An emergency plan that does not only kick in on death: at the KV you deposit a power of attorney that, in the event of sudden incapacity or death, automatically activates a pre-arranged deputy arrangement. Ideally you have a pre-agreed deputy arrangement with two or three collegial practices - in writing, with a fee arrangement, in line with KV rules.

That stops the first weeks being lost in the crisis - the weeks in which the family would otherwise have to search, check and negotiate. In practice these are the most precious weeks of the Gnadenquartal.

Building block 3: lifetime gift to licensed child plus equalisation payments

If one of your children is a doctor and will take over the practice: hand it over during your lifetime, not on death. That has three advantages:

• The exemption rules under § 13a ErbStG and § 13b ErbStG also cover freelance practices as qualifying business assets - if the retention period (five years for the standard exemption, seven years for the optional exemption) and the payroll-sum rule are met, 85 or 100 percent of the practice value remains tax-free. The same system underpins any business succession with tax planning in five steps.
• The transferring generation actively steers the transfer design, rather than leaving it to the inheritance case.
• Equalisation payments to non-licensed siblings flow correctly from parents to children (tax class I, high personal allowance) rather than from sibling to sibling (tax class II, low personal allowance).

If the practice is transferred early to the licensed child, the handover can be secured via a retained usufruct (Nießbrauchvorbehalt) - how that works and the pitfalls involved are shown in the piece on gifts to children with usufruct and tax planning.

On a practice sale from age 55: the reduced tax rate under § 34 (3) EStG

If you sell the practice to an external successor rather than handing it over in the family, the tax burden turns on two levers - and on your age. The sale of a freelance practice is a preferential event under § 18 (3) EStG in conjunction with § 16 EStG; the gain counts as extraordinary income.

First, the personal allowance under § 16 (4) EStG: sellers who have reached the age of 55 or are permanently unable to work are entitled, once in a lifetime, to a personal allowance of EUR 45,000. The catch that almost every back-of-the-envelope calculation overlooks: this allowance is reduced euro-for-euro from a capital gain of EUR 136,000 and is fully used up at EUR 181,000. For typical practice gains above EUR 181,000, it therefore brings precisely nothing.

Second - and this is the real lever - the reduced tax rate under § 34 (3) EStG. Under § 34 (3) EStG, a seller from the completed age of 55 or with permanent incapacity can, on application, demand once in a lifetime that a capital gain of up to EUR 5 million be taxed at only 56 percent of the average tax rate (minimum 14 percent). This "half tax rate" is the decisive lever on a high practice gain; the § 16 personal allowance is then no longer relevant.

The so-called fifths rule (§ 34 (1) EStG), also often cited, spreads the gain arithmetically over five years. Its effect, however, fizzles out if the capital gain on its own already reaches the top tax rate - which is regularly the case for a mid-sized practice value. For the seller over 55, the reduced average tax rate under § 34 (3) EStG is therefore usually the clearly better choice. (Note on the state of the law in 2026: the fifths rule was abolished only for wage-tax withholding - for capital gains in income-tax assessment, § 34 EStG continues to apply unchanged.)

Sample calculation (rough estimate, single, without solidarity surcharge and church tax): A doctor sells at 58 his practice for EUR 500,000, book value EUR 50,000, capital gain EUR 450,000. The personal allowance under § 16 (4) EStG is fully used up at this gain and brings nothing. EUR 450,000 remains taxable. At the full rate, roughly EUR 185,000 in income tax would arise. With the reduced tax rate under § 34 (3) EStG the burden drops to about 56 percent of the average rate - roughly EUR 105,000. The saving is therefore in the order of EUR 80,000, depending on the other income of the year. Someone who sells the same practice at 53 does not meet the age threshold - neither § 16 (4) nor § 34 (3) EStG apply, and the tax is around EUR 80,000 higher. The threshold of the 55th birthday here decides a five-figure amount. An initial orientation on the practice value is provided by the business-value calculator.

The BSG ruled on 14 December 2011 (case no. B 6 KA 39/10 R): for the determination of the market value of a practice by the admission bodies there is no room if the departing contract physician has agreed a purchase price with all applicants. In disputes the modified earnings-value method is the standard. For the heir family this means: whoever finds an agreed buyer has the valuation monopoly - the KV choice is formal, the purchase-price negotiation is free.

Tax trap for heirs: who pays the income tax on the capital gain?

If the heirs sell the practice out of the estate - the common case where there is no licensed successor in the family - a capital gain arises that must be taxed. As universal successors (Gesamtrechtsnachfolger, the person who steps into the legal position of the deceased as a whole) the heirs step into the tax position of the deceased (§ 1922 BGB, § 45 AO). If they realise the gain themselves, the income tax falling on it is their own burden - and it cannot be limited to the estate without more, even where the estate is over-indebted. It is precisely at this point that heirs have already run into financial hardship, because they had already distributed the sale proceeds before the tax office assessed the tax.

In addition, the age-dependent benefits of §§ 16 (4), 34 (3) EStG attach to the person of the seller. If the selling heir - often the spouse or a child - is younger than 55 and not unable to work, the personal allowance and the reduced tax rate are lost. That is one of the strongest arguments for arranging the sale during the owner's lifetime, while the practice owner can still use the benefits personally.

Takeover or inheritance - the intent makes the difference

Anyone googling "take over a medical practice" is rarely looking for the inheritance case. From a buyer's perspective what counts is the valuation method (modified earnings-value method under BSG standard), the financing (local commercial bank versus apoBank - the German doctors' and pharmacists' bank - versus seller loan), the availability of a panel-doctor seat in the planning area, and the tax treatment of the goodwill (amortisation over three to five years under BFH (Bundesfinanzhof, the German Federal Fiscal Court) case law on practice value as an intangible asset). For the inheritance side: the more structured the transfer is prepared, the higher the price chance - the buyer perspective is therefore also relevant for the seller family. The buyer route is examined in the spoke taking over a medical practice in 2026: valuation, financing, KV procedure.

The special case of the MVZ-GmbH: tax advantage or tax trap?

Some doctors consider an MVZ-GmbH (Medizinisches Versorgungszentrum in the legal form of a German GmbH, a limited-liability company). The tax argument sounds tempting: instead of up to 45 percent income tax, the GmbH pays only 15 percent corporation tax on retained profits (§ 23 KStG - the German Corporation Tax Act).

What gets lost: on top come solidarity surcharge and trade tax, so that the real retention burden of the GmbH is around 30 percent, not 15. And the benefit applies only as long as the profits stay in the company. On distribution to the doctor additional tax arises (partial-income method or flat-rate withholding tax), which largely closes the gap to income tax. Anyone who in any case withdraws the bulk gains little in tax terms.

The often-emphasised limitation of liability also carries only so far: for personal treatment errors the doctor as a person remains liable under the treatment contract. On top come guarantee and security constructions vis-à-vis the KV that hollow out the limitation in practice. And a look ahead is worth it: the corporation-tax rate remains at 15 percent in 2026, but under the current law is to fall step by step to 10 percent in 2032 - that changes the advantage calculation going forward. With several locations or participations, often a holding structure with its tax advantages is the more elegant solution. The MVZ-GmbH fits certain situations; it is not a blanket cure-all.

What to check in 2026

If you are an established doctor, check four points:

1. Practice emergency plan: do you have a written KV power of attorney and an agreed deputy? If not: that is point one for the next two weeks.
2. Will with practice clause: have you testamentarily arranged what is to happen to the practice - including a Testamentsvollstrecker (executor) with sector knowledge? If your will comes from a template: it is not enough for a practice.
3. Marriage contract with practice clause: does the goodwill of your practice fall into the equalisation of gains (Zugewinnausgleich, the German default rule on dividing marital accrued wealth in divorce) in the event of divorce? For practices worth EUR 400,000+, a modified marriage contract protects the practice and secures the spouse by other means.
4. Timing of the sale: if you are close to 55 and considering a sale - the right order of steps (age threshold for § 16 (4) and § 34 (3) EStG, practice closure versus sale) decides five- to six-figure amounts.

Frequently asked questions

What happens to the practice when the doctor dies?

Under § 95 SGB V the contract-physician licence expires immediately on death. The heirs are left with only the Gnadenquartal (grace quarter, § 103 SGB V) - at most until the end of the quarter following the quarter of death, in practice often less than six months. Within that period they must appoint a licensed deputy and apply for the succession procedure under § 103 SGB V. If they miss that, the contract-physician practice value is lost - depending on practice size, EUR 400,000 to over EUR 1 million.

What is the Gnadenquartal for a medical practice?

The Gnadenquartal is the period in which the Kassenärztliche Vereinigung permits the practice to be continued through a deputy, so that the heirs can find a licensed successor and initiate the succession procedure. It ends with the expiry of the quarter that follows the quarter of death - so at most around six months, often significantly less.

How is a medical practice inherited, and can non-licensed children continue it?

The practice as an asset passes to the heirs by universal succession (Gesamtrechtsnachfolge, § 1922 BGB) - so non-licensed relatives can also inherit. They may, however, exercise the medical profession only if they themselves hold the Approbation (§ 2 Bundesärzteordnung). A silent participation by non-professionals in the practice income is also impermissible under professional law. Without a licensed heir the practice must therefore be sold, otherwise the panel-doctor seat is lost.

Inheriting or taking over a medical practice: what is there to watch out for in tax and professional law?

In professional law, for both routes the Approbation requirement applies (§ 2 Bundesärzteordnung). On inheritance the licence expires with death (§ 95 SGB V); only the Gnadenquartal with the succession procedure under § 103 SGB V remains, and in closed planning areas the admission committee decides without any proposal right of the heir. If the practice is handed over in the family to a licensed child, the exemption rules of §§ 13a, 13b ErbStG apply with 85 or 100 percent tax exemption; equalisation payments belong in tax class I (parents to child, EUR 400,000 personal allowance per parent under § 16 ErbStG) rather than tax class II (EUR 20,000). On a sale to an external successor from age 55 onwards, the reduced tax rate under § 34 (3) EStG is the decisive lever.

How high is the tax saving on a practice sale under § 16 and § 34 EStG?

On a sale at EUR 500,000 proceeds and EUR 50,000 book value (capital gain EUR 450,000) the personal allowance of EUR 45,000 under § 16 (4) EStG is fully used up - it applies only up to a gain of EUR 181,000. The real benefit comes from age 55 onwards from the reduced tax rate under § 34 (3) EStG (56 percent of the average tax rate, minimum 14 percent). The saving versus the full rate is roughly EUR 80,000, depending on the other income.

What is the Berufsträgerklausel (professional-status clause) and when does it apply?

The Berufsträgerklausel bundles the principle that only licensed doctors may practise a practice (§ 2 Bundesärzteordnung) and that non-professionals may not be involved in medical activity (model professional code of the doctors, MBO-Ä). It applies to every form of transfer - inheritance, gift or silent participation. Non-professional heirs or co-owners are excluded from practising the profession.

Can a doctor be the heir of his or her patient?

In principle yes - testamentary freedom allows any person to benefit a doctor in a will. It becomes delicate under professional law when the disposition is linked to the treatment: the model professional code prohibits doctors from having advantages granted to them for the treatment. If the patient was improperly influenced or the disposition was made in a situation of dependence, the will can also be immoral and therefore void (§ 138 BGB). For care-dependent nursing-home residents the state nursing-home laws prohibit gifts to staff - a standard by which treating doctors should also orient themselves.

Personal conversation?

If you want to check concretely whether your practice, marriage and inheritance structure covers the typical doctor-specific pitfalls: a free initial 30-minute meeting with Florian Enders clarifies where the greatest risks lie and which of the three building blocks should be implemented most urgently in your case.

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Related topics for doctors and practice owners

• Taking over a medical practice in 2026: valuation, financing, KV procedure: the spoke from the buyer perspective - modified earnings-value method, apoBank conditions, selection procedure at the admission committee, goodwill amortisation.
• Business succession: tax planning in 5 steps: the overarching system of business transfer, on which the exemption of the medical practice also builds.
• Inheritance tax 2026: table, personal allowances and tax classes: all personal allowances and tax rates by degree of relationship - the basis for the equalisation-payment structuring.
• Client: doctors' GbR and MVZ - structuring and sale: anonymised practice case with three doctors in a GbR (Gesellschaft bürgerlichen Rechts, a German civil-law partnership) practice community, build-up of an MVZ-holding structure, later sale - the structuring logic described here theoretically, played out in practice.
• 7 risks for family wealth - and which structures protect: overarching framework in which the doctor-specific risks (Berufsträgerklausel, panel-doctor seat) are embedded.
• Start succession planning early: why 10 years of lead time are decisive: gift allowances, equalisation payments and retention periods need time.
• Holding structure: tax advantages, set-up, legal forms: for MVZ participations or several practice locations, often the more elegant structure. (Eine Holding in German tax law is a parent company that holds subsidiaries; here used for MVZ participations or several practice locations.)
• Gift to children: tax, structuring, the usufruct trap: transfer the practice early to the licensed child with retained usufruct.

External sources and statutory texts

• § 95 SGB V at gesetze-im-internet.de - contract-physician licence and its end on the doctor's death
• § 103 SGB V at gesetze-im-internet.de - admission restrictions and succession procedure in closed planning areas
• § 16 (4) EStG at dejure.org - capital-gain personal allowance from age 55 or on incapacity (reduction from EUR 136,000)
• § 34 EStG at dejure.org - fifths rule (subpara. 1) and reduced tax rate for capital gains from age 55 (subpara. 3)
• §§ 13a, 13b ErbStG at gesetze-im-internet.de - exemption allowance for business assets and freelance practices
• § 630f (3) BGB at gesetze-im-internet.de - retention duty for patient records (ten years)
• § 45 AO at gesetze-im-internet.de - universal succession in claims and debts from the tax relationship
• BSG, ruling of 11 December 2013 - B 6 KA 49/12 R - practice capable of being continued as a precondition for successor admission
• BSG, order of 5 June 2013 - B 6 KA 2/13 B - reduction in practice-share value on prolonged non-exercise
• BSG, ruling of 14 December 2011 - B 6 KA 39/10 R - market-value determination by the modified earnings-value method
• BFH, ruling of 21 February 2017 - VIII R 7/14 - practice value as a package of opportunities including the contract-physician licence
• Model professional code for doctors (Musterberufsordnung, MBO-Ä) of the Bundesärztekammer - prohibition of participation by non-professionals and disposition rules

State of the law: 2026.