German Inheritance and Inheritance Tax Law

German Inheritance and Inheritance Tax Law

As of August 2015, under the regime of the new EU Regulation on Succession Law everywhere in the EU except for in Denmark, Ireland and Great Britain the inheritance laws of such jurisdiction are applicable where the dececedent had his last residual abode prior to his death. This would also apply in regard to habitual abodes in countries that have not adopted the EU Regulation. No special connecting factor to a jurisdiction is stipulated concerning the location of real estate. In his will, the testator may opt for his home law. The EU Regulation ensures a legal harmonization between the adopting EU countries. However, divergent decisions from courts of other countries would not be enforcable.

Successions under German inheritance law are put into effect pursuant the rule of universal succession. This means that the heir automatically steps into the shoes of the deceased at the time he passed away. He obtains immediate ownership without any prior approval by a court or the need to file an acceptance of the inheritance.

Therefore, the heir is liable for the debts of the decedent. His liability is not limited to the assets forming the estate. In order to limit or even avoid his liability one is well advised to take the initiative and make use of the various measures and proceedings provided by the law.

Two or more heirs form a community of inheritance. They can dispose over any assets forming the estate only by unanimous consent. Measures in regard to the administration of the estate are subject to a majority decision. Every co-heir may immediately claim and sue for the dissolution of such community unless the decedent testated or the heirs agreed upon otherwise. In regard to real estate he has to initiate a compulsory partition by auction. The probate courts do not manage the process of the dissolution of the community of heirs and the distribution of the assets heirs.

Legacies, i.e. the gift of assets or an amount of money specified in a will must be performed by the heirs in order to fulfill the succession in this regard. The probate courts do not supervise the settlement of such bequest claims.

Renouncement of the Estate under German Law

Heirs can renounce the accrual of a succession only within a specific period. In principal, such deadline expires six weeks after he/ she knew about both the succession and his/ her entitlement regarding the estate. Should either the inheritor or the decedent have lived abroad this period is extended to six months. The renouncement must be effected and delivered at the local competent probate court by that time. In general, the signature on such declaration must be notarised by a German notary or the German general consulate.

German Law of Intestate Succession

Unless the deceased arranges his succession by making a will or concluding a contract affecting the devise of his property his spouse or his/ her inscribed same sex partner and his descendants are called to succession. Should no descendants exist his parents and their descendants (i.e. the siblings of the deceased) will be entitled to inherit instead. Consequently, the widespread assumption that the spouse is always entitled the sole intestate inheritance is wrong in most cases.

Effects of the Matrimonial Property Regime on the Spouses or Inscribed Same Sex Partners Intestate Quota

The inheritance quota of the spouse according to German law depend on the matrimonial property regime the married couple lived with. Thereby, the law distinguishes between the separation of property, the joint property and the community of surplus with the latter being the German statutory matrimonial regime. Unless the spouses have agreed otherwise the matrimonial regime of such country would apply where the spouses had their habitual residence at the time of the marriage. Consequently, foreign property regimes are somewhat adjusted in order to fit with the German legal inheritance system.

Form and Interpretation of a Will

According to German law, only testaments which were completely handwritten as well as notarial recorded testaments are valid. In contrast, witnessed testaments allowed in many English speaking countries are unknown in German civil law. However, in cases involving testators of a foreign citizenship wills which comply with the formal requirements of the foreign jurisdiction are acknowledged in Germany, too. The same applies if the will is written abroad or if the testator has his residence abroad. As a consequence, testaments of a somewhat international background regularly do not fail at the German courts.

The proper interpretation of a will does not provide a strict adherence to its wording because the decedent´s intention prevails the way how he expressed it. Therefore, one could additionally refer to other indications and evidence apart from the will for the interpretation, such as letters or oral remarks. For instance, it may occur that a decedent used technical terms which he may had not understood completely. One might also object against a settlement relying on the will´s wording on the grounds that this approach would imply a deviation from the decedent´s initial concept of distribution not being reflected in the will anymore owing to a fundamental change of the factual situation after its establishment. However, such asserted concept must be make itself heard at least in the outlines of the will.

Testamentary Succession and Compulsory Portion

Rights to a compulsory portions for disinherited close relatives or even to an augmentation of such compulsory portion in view of the testator´s donations prior to his death may arise in shape of a claim for money compensation. Under specific circumstances a partly disinherited individual might have to waive his insufficient or subsequent rights of inheritance or legacy beforehand. In other cases, an heir might be entitled to claim for an additional monetary completion of his insufficient testamentary share.

Spouses as well as the offspring of the decedent are entitled to a compulsory share. Should no descendants exist the parents of the deceased would be entitled but not the siblings. The compulsory share is a money claim and amounts to half of the value of the legal share. It is computed on the basis of the estate value less the related debts. Furthermore, donations effected by the decedent may also affect the quota. The German probate courts supervise neither the assertion of such share nor their settlement. The person entitled to such share will have to pursue his claims against the heirs in our out-of court. Entitlements for the compulsory share become time barred three years since the person concerned has become aware of the succession and the will affecting his legal share.

Children of a male decedent which were born out of wedlock after June 30, 1949 have been legally equated with legitimate children since April 1st, 1998. However, this does not apply to children which have agreed with the decedent upon an early equalization of inheritance according to the former regulation as stipulated in § 1934 d of the German Civil Code.

The Role of the Court, Executors and Other Institutions

The local court (Amtsgericht) that is locally competent for district where the deceased had his/ her last residence is also competent for dealing with the estate (Nachlassgericht). Should the deceased have had his last residence abroad the court at Berlin Schöneberg would be locally competent. The law offices of Henning M. Haarhaus are situated in this district.

German courts have only a limited functions in comparison to the probate courts operating under common law jurisdictions.

Original copies of all (present and former) wills have to be delivered to this court without undue delay. The court opens the wills and send authori