Where to Find a “Missed” Inheritance?

“Never say you know a person

until you have shared an inheritance with them.”

Johann Kaspar Lavater

In our firm's work we quite often encounter questions about succession (Erbrecht) in Germany. This area is governed by Book Five of the German Civil Code (Bürgerliches Gesetzbuch, BGB), which deals with all the key procedural questions of succeeding to an estate – including acceptance of the inheritance, the place and time at which succession opens, disclaimer of the inheritance (Ausschlagung), the heirs' liability for the deceased's debts, the right to a compulsory share (Pflichtteil), the drafting and notarisation of wills, the grounds for unworthiness to inherit (Erbunwürdigkeit) and other questions of inheritance law.

As our readers are no doubt already aware, there are two ways of succeeding to an estate – by will and by statutory succession. In inheritance law the wishes of the deceased always take precedence, and German law is no exception. By means of a will, anyone living in Germany can dispose of their own property in the event of their death and specify in it who, in their view, should be among their heirs. Where there is no will, succession follows the statutory rules – which may deprive many of the deceased's relatives, such as grandchildren or more distant relatives who were in fact close to the deceased, of part of the estate.

Statutory succession applies where there is no will or where the will does not dispose of the deceased's entire estate.

Accordingly, under §§ 1924–1929 BGB German law distinguishes several orders of statutory heirs:

• first order – the deceased's descendants, i.e. his or her children, who inherit in equal shares; a child who died before the deceased is replaced by his or her own descendants, e.g. grandchildren (§ 1924 BGB);
• second order – the deceased's parents and their descendants (§ 1925 BGB);
• third order – the deceased's grandparents and their descendants, i.e. uncles, aunts and cousins (§ 1926 BGB);
• fourth order – the great-grandparents and their descendants (§ 1928 BGB);
• fifth and more remote orders – the deceased's more remote ancestors and their descendants (§ 1929 BGB).

It is important to note that the deceased's spouse does not belong to any of these orders – § 1931 BGB lays down special rules for the spouse. The spouse is called to the succession alongside the heirs of the first order or, where there are none, alongside the heirs of the second order; however, the spouse is entitled not to an equal share of the estate but to 25% when inheriting alongside children and 50% when inheriting alongside the deceased's parents or grandparents (§ 1931(1) BGB). If the spouses lived under the statutory matrimonial property regime of the community of accrued gains (Zugewinngemeinschaft), this share increases by a further quarter (§ 1371(1) BGB). If there are neither relatives of the first or second order nor grandparents, the spouse inherits alone (§ 1931(2) BGB). All other heirs inherit their share in equal parts with the other heirs called to the succession.

Succession opens (Erbfall) on the day of the deceased's death, and the jurisdiction of the probate court (Nachlassgericht) is generally determined by the deceased's last habitual residence (Art. 4 EU Succession Regulation, § 343 FamFG). Under German law the estate passes to the heirs automatically, without any action on their part – the heirs therefore do not need to apply separately for the inheritance. The heirs do, however, have the key right to decide whether to accept or disclaim the inheritance. The reason is that under German law heirs inherit not only the deceased's assets but also his or her debts. An heir may either accept the inheritance in full or disclaim it in full. It is important to note that a disclaimer must be declared within six weeks; the period begins once the heir learns that the inheritance has passed to him or her and of the reason for being called as heir (§ 1944(1), (2) BGB). The period is six months only if the deceased's last residence was solely abroad or the heir is abroad when the period begins (§ 1944(3) BGB). The disclaimer is declared to the probate court – either recorded by the probate court or in publicly certified form (§ 1945(1) BGB). It takes effect as if the disclaiming heir had not survived the deceased: his or her share passes to whoever would then be called – first to the disclaiming heir's own descendants (§ 1953(1), (2) BGB).

In this article we tell the story of a family who came to us for help with the transfer of ownership of inherited property.

A young man named Vitali (name changed) came to our firm for a consultation, needing an explanation of his rights and further legal assistance. His situation was this: some time earlier his mother had died unexpectedly without leaving a will. As the great playwright George Bernard Shaw aptly remarked: “Life is too short to be taken seriously.” Vitali's mother – let us call her Lyudmila – was still a relatively young and active woman; she suffered from no chronic illnesses, had no risky hobbies and was very careful about matters of safety. For roughly the last ten years she had lived with her husband and her adult son in a house outside the city. The woman's new husband was not Vitali's biological father. Vitali had never got on particularly well with his stepfather. True to the maxim that “a bad peace is better than a good quarrel”, all three lived under one roof, while Vitali's mother always tried to smooth over tensions and avoid open conflict within the family. The woman's death, of course, came like a bolt from the blue. According to the doctors, she died of a heart attack. Lyudmila had apparently been suffering for some time from coronary heart disease, which had long gone unnoticed. In the first weeks after Lyudmila's death, naturally, no one thought or spoke about the estate. Once the relatives had recovered somewhat from the shock, they received official letters – in such cases usually from the probate court – with information about the inheritance to which each of them was entitled. Lyudmila had not left much property. During her lifetime, however, she had owned a house in which the family lived together. This large and valuable house became the main asset of the estate. It is difficult now to understand what led Vitali to give up his share of the inheritance – whether he feared that, along with the house, he would also inherit the loan on it that had not yet been fully repaid, whether he wanted to leave the house as quickly as possible and no longer be reminded of everything connected with it, or whether the young man was simply so shaken by the death of his beloved mother that he was not fully aware of what he was doing. Be that as it may, our future client declared to the probate court, in the prescribed form, that he disclaimed his entire share of the inheritance. As a result, in this family 50% of the house passed to the late Lyudmila's husband and the remaining 50% in equal shares to her parents; the size of the spouse's share also depends on the matrimonial property regime. A few months later, Vitali turned to our firm asking whether the situation could still be put right and whether he could, after all, subsequently receive part of the estate. Unfortunately, at the very first consultation we had to tell our client clearly that this was not possible, since a disclaimer of an inheritance, once declared, cannot be “revoked” in Germany. Contesting the disclaimer (Anfechtung, §§ 1954–1957 BGB) – for example because of a mistake about an essential characteristic of the estate, such as its over-indebtedness (§ 119(2) BGB) – is possible only within narrow limits and, as a rule, only within six weeks of learning of the ground for contesting it. That, however, was by no means the end of the matter. Just a month later, Lyudmila's parents came to see us with a request to transfer the inheritance they had received from their late daughter to their grandson, that is, to Vitali. The elderly couple had concluded that they themselves were unlikely to derive any benefit from the property that had unexpectedly fallen to them, especially as they did not intend to live in the house themselves. It was therefore decided to transfer the 50% share of the house belonging to Lyudmila's parents to Vitali. A lawyer at our firm took on the matter straight away and prepared the documents required to transfer ownership of the property to Vitali. Our services covered full support for this transaction – from drafting the gift agreement (Schenkungsvertrag) and accompanying the parties at the signing before the notary through to the registration of the transfer of ownership in the land register (Grundbuch). A gift of a share in real property requires notarial recording (§ 311b(1) BGB), and ownership passes only upon conveyance (Auflassung, § 925 BGB) and registration in the land register; for gift tax purposes a grandchild falls into tax class I, and since his mother had already died, an allowance of €400,000 instead of €200,000 applies to him (§ 15(1), § 16(1) nos. 2 and 3 ErbStG). As a result of this comprehensive work, Vitali became the owner of half of the house in which he had lived with his mother and her husband. It seems unlikely that the two men will go on living together. We hope that they will reach an agreement on how to deal appropriately with the shares that have passed to them in equal parts. Of course, the lawyers at our firm will, if needed, assist Vitali in drawing up a contract for the sale of the share to his stepfather or in legally securing and implementing any other arrangements reached.

We wished our client to remain level-headed even in such a difficult period of his life and not to take any hasty steps. Every lawyer knows that any signature on a legally valid document – even one given without due thought – can have serious and sometimes unforeseen consequences that cannot always be reversed. If you have doubts about whether a document presented to you for signature is correct or lawful, or if you need assistance with procedural questions, you are welcome to arrange a consultation with us. The lawyers at our firm always approach each client's case individually and analyse all the circumstances in the light of the statutory provisions and case law. On this basis we examine the legal options even in situations that appear “hopeless” or “deadlocked”.

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This article is for general information only and does not replace individual legal advice.

Inheritance & Estate Law