How to Limit the Personal Liability of Executors and Beneficiaries in German Probate Cases

Posted on August 9, 2018 by Bernhard Schmeilzl

Using “Public Creditor Notification” (Aufgebotsverfahren) to restrict liability to the funds available in the German estate

Under German succession laws, a beneficiary (Erbe) is personally liable for the debts of the decedent, i.e. if the debts of the deceased exceed the value of the estate then the beneficiaries must pay the remaining debts out of their own pockets. More here.

Obviously, no beneficiary in his or her right mind wants that result (except for unusual circumstances, e.g. when the family wants to keep under the blamket that the deceased was overindebted). In most cases, the beneficiaries in Germany do not want to be personally liable for the debts of the decedent. The legal tool to avoid such personal liability is to renounce the inheritance (Erbausschlagung)

Making the choice whether to renounce the inheritance is easy if the estate is obviously indebted. However, this is not always evident, especially since the heir only has six weeks (or six months in international constellations) to formally disclaim the German inheritance.

What if it is not yet clear whether the German Estate is indebted?

In these situations, an alternative to the immediate and irrevocable renunciation of the entire German inheritance is the so called “Aufgebotsverfahren“, i.e. Public Creditor Notifcation pursuant to sec. 1970 German Civil Code (BGB).

In practise this means that the executor or/and the beneficiaries of the German estate request all creditors of the estate by way of public notice procedure to come forward and notify their claims. This enables the executor and the beneficiaries to produce an estate inventory which contains all debts. The main advantage is, of course, that all creditors which do not register their claims until a certain deadline, lose their claims if the assets in the estate are insufficient.

So this approach is somewhat similar to how executors under English law can protect themselves by advertising notices under section 27 of the Trustee Act 1925 in the London Gazette and in local newspapers. However, the German procedure is more formal due to the fact that German succession law uses the principle of universal succession, i.e. a restriction of liability to the value of the estate is an exception from the general principle under german law.

How does the Public Notice to Creditors of the Estate work?

The details of the “Aufgebotsverfahren” are regulated in sections 433 ff. of the German Gesetz über das Verfahren in Familiensachen und in den Angelegenheiten der freiwilligen Gerichtsbarkeit, FamFG (German Act on Proceedings in Family Matters and in Matters of Non-contentious Jurisdiction).

The heir or executor applies to initiate said Public Creditor Notification Proceedings with the competent German Local Court (“Amtsgericht”). The applicant must submit a list of all known creditors, sec. 456 FamFG.

Once the Court starts the Public Notification Proceedings, it demands the Creditors of the Estate (“Nachlassgläubiger”) to lodge their claims until a specific application date. Therefore, the Public Notification is e.g. announced at the Public Notice Board at the court, sec. 435 FamFG. The periods needs to be at least six weeks between the first day of publication and the deadline to lodge a claim, sec. 437 FamFG. After this deadline, the Court issues a Preclusion Order (“Ausschließungsbeschluss”) according to sec. 439 FamFG.

After the deadline, the executors and beneficiaries know what the debts of the German estate are. They can then decide whether to renounce or whether to accept the inheritance. If they do accept the inheritance, the liability is limited to the value of the estate. Thus, if a creditor shows up later, the heir does not run the risk of having to pay this debt out of his own pocket.

However, claims that have not been lodged in time are not necessarily completely worthless. They do indeed still exist and must be paid regardless of the Public Notification Proceeding. However, according to sec 1973 BGB, the heir can refuse to pay these creditors inasmuch as the estate is exhausted by the claims of non-precluded creditors (i.e. those, who have lodged their claims within the Public Notification period). In other words: The Aufgebotsverfahren does not protect the heirs against a creditor showing up later and still demanding payment, as long as the total estate has not yet been used up.

Thus, the liability for debts of the deceased is effectively limited to the value of the German estate. The result may still be that the heir ends up with having nothing of the inheritance left, but at least the heir does not have to satisfy debts of the deceased using his own private funds.

For more information on German-British probate matters and international will preparation see the below posts by the international succession law experts of Graf & Partners LLP:

Or simply enter on the “probate” or “inheritance” in the search box above.

The law firm Graf & Partners and its German-English litigation department GP Chambers was established in 2003 and has many years of experience with British-German and US-German probate matters, including the representation of clients in contentious probate matters. We are experts ininternational succession matters, probate and inheritance law. If you wish us to advise or represent you in a German or cross border inheritance case please contact German solicitor Bernhard Schmeilzl, LL.M. (Leicester) at +49 941 463 7070.

German Probate: What to do if a beneficiary (co-heir) cannot be found?

Posted on August 7, 2018 by Bernhard Schmeilzl

Does anyone know where Great-Granduncle Fritz lives?

In some probate cases (Nachlassverfahren), especially if a decedent had no children, no surviving spouse and no surviving siblings, the next of kin cannot be located, either because the relevant persons have died so long ago that the closest living relatives of the testator can’t be identified (e.g. died in the war) or because they have moved to another country and nobody knows their whereabouts.

Even if only one of several beneficiaries (co-heirs) is missing, this creates a serious problem for the other co-heirs in Germany, because it blocks the distribution of the German estate (Nachlassverteilung) among the members of the community of heirs (Miterbengemeinschaft).

While each member of the community of heirs is able to apply for a German Grant of Probate (Joint Certificate of Inheritance, i.e. a Gemeinschaftlicher Erbschein), such Erbschein will not do them much good. This is because the Erbschein lists all members of the community of heirs (Erbengemeinschaft) and thus each bank, each insurance company, each broker and the German land registry will demand all members of the community of heirs to co-sign any documents. In other words: a community of heirs can only act jointly, section 2040 German Civil Code (BGB).

We know who the (co-)heir is, but not where he or she lives

In this situation, it will not help to consider curatorship (Nachlasspflegschaft) for the German estate pursuant to sec. 1960 German Civil Code. A curator of the German estate is appointed by the German Probate Court only in cases when the heir(s) is (are) completely unknown and need(s) to be identified. More on this here.

If, however, it is well known who the heir is, but the same just cannot be located and contacted, the legal requirements for appointing a curator of the German estate are not fulfilled.

In these situations, i.e. for a known heir of adult age whose residence is unknown, a so-called “Curator in absentia” (“Abwesenheitspfleger”) has to be appointed by the competent German Guardianship Court (“Betreuungsgericht”), see section 1911 BGB. Thus, in these constellations, the task is not to legally assess who the beneficiary is but instead to protect the interest of a known beneficiary who is currently absent and cannot be contacted.

The German Guardianship Court (Court of Protection) is a department of each German Local Court (“Amtsgericht”), as are the German Probate Registries (Nachlassgericht) and the German Land Registries (Grundbuchamt).

The court appointed curator in absentia protects the absent heir´s interest in the estate. The main duty is to preserve the inheritance for the absent heir until he or she can be contacted. In practice, this means that the monies will be kept on a separate escrow account. If, however, there are immoveables (property) in the estate, matters get complicated, because the curator in absentia will only agree to selling such property / real estate when absolutely necessary, for instance to repay the deceased´s debts. If such a sale is not necessary then the absent co-heirs effectively blocks the distribution of the estate. The curatorship ends once the heir is found and is able to deal with the inheritance, sec. 1922 BGB.

Summary: Estate Curatorship under German Law

The difference between these various forms of curatorship is that a Curator for unknown heirs (Nachlasspfleger für unbekannte Erben) acts on behalf of one or more persons, not exactly knowing for whom. In contrast, the Curator in absentia (Abwesenheitspfleger) is appointed to represent a well-known specific person who simply cannot be contacted.

For more information on German-British probate matters and international will preparation see the below posts by the international succession law experts of Graf & Partners LLP:

Or simply enter on the “probate” in the search box above.

Entangled in German Probate Proceedings?

Posted on August 7, 2018 by Bernhard Schmeilzl

Renounce Inheritance against Compensation Payment

In this post, we reveal a simple trick how to be released from the duties and obligations of being a German co-heir while still obtaining a portion of the German estate. The buzzwords are “Verpflichtung zur Ausschlagung gegen Abfindung“, i.e. contract to renounce a German inheritance against compensatory payment (make-up pay).

Background: The Basics of German Probate and Estate Administration

In previous posts, we have explained German succession rules, the principle of direct, automatic and universal accession (Prinzip der Universalsukzession) and the so called Community of Heirs (Erbengemeinschaft):

– Important Facts on German Laws of Succession and German Probate

– The Infamous “Community of Heirs” in German Inheritance Law

In case you have made in inheritance in Germany, either because you are mentioned as a beneficiary in someone’s will or due to German intestate succession rules, you may find yourself confronted with complicated and costly probate issues. You need to (co-)instruct a german probate lawyer to file the probate application, to submit the German IHT forms and to deal with the German estate. Then you are expected to fly to Germany to give the oath at the local probate registry. Worst case, you dislike the co-heirs and cannot come to terms with them, for instance about whether to sell the German property.

“Let me out of here!”

You can get rid of all these issues by simply renouncing the inheritance, of course (more here). But then you lose everything, right? Well, not necessarily. You can make an offer to the other beneficiaries (co-heirs):

“I will renounce my inheritance if you pay me X amount as compensation for my share in the German estate.”

If the co-heirs are smart, they will be very tempted, because this makes probate proceedings easier and there will be one less person to deal with when later distributing the estate.

Under German law, such a “Vertrag über Erbausschlagung gegen Abfindung” is permitted and — surprinsingly — it does not even need to be in notarial form. While even an oral contract would be valid, such an agreement to renounce against compensation payment should obviously be made in writing.

To avoid misunderstanding: the renunciation itself must then later on be made before a notary or German consular officer (see. section 1945 German Civil Code). But the agreement in which someone enters into the obligation to (later) declare the renunciation does not have to be in notarial form (OLG Munich OLGE 26, 288; Gothe MittRhNotK 1998, 193).

But careful: This option is only available as long as the beneficiary who want to leave the community of German heirs has not already declared to accept the inheritance. Such acceptance can be made either by simple declaration or even by “telling behavious” (schlüssiges Verhalten), e.g. by accepting a partial payment from the estate or by taking certain assets which are part of the estate. So if you consider to leave the community of heirs against compensation, do not prematurely send out letters stating “I have inherited”.

How much do I get for my share in the German estate?

How much the other beneficiaries are willing to pay you to leave the community of heirs and whether the co-heirs shall have to pay that amount before you then formally declare the renunciation or vice versa can be freely negotiated between the heirs. The parties can also agree on partial payments, half at the time of signature of the renunciation obligation agreement, the other haft after the renunciation has actually been declared vis-a-vis the German probate court.The amount can even be left open if the estate needs to be professionally evaluated first. Then the parties can agree on some formula, e.g. 20% of the net estate after costs and taxes.

Our firm has drafted hundreds of such agreements and will ge glad to assist.

For more information on German-British probate matters and international will preparation see the below posts by the international succession law experts of Graf & Partners LLP:

Or simply enter on the “probate” in the search box above.

Does anyone know about Great-Granduncle Fritz?

Posted on July 23, 2018 by Bernhard Schmeilzl

What to do in Germany when an Heir (Beneficiary) cannot be found

In Germany, due to the principle of universal succession (which is governed by §§ 1922, 1937 BGB of the German Civil Code), it is the heir´s duty to look after the estate. Under German inheritance law, there is no personal representative to take possession of the estate. The German Probate Court (“Nachlassgericht”) will also not interfere with the administration of the estate. The Court will only act if someone applies for a German grant to be issued. Then it will assess whether the person(s) applying for the grant are the rightful heirs. While, in theory, the German probate court is obligated to actively research the legal heirs (Amtsermittlungsgrundsatz), in practice the court will merely demand the probate applicant to submit the relevant information and necessary documents (i.e. death certificates, birth certificates, marriage and divorce certificates).

How to resolve the problem of unknown relatives in German Probate Applications

Problems often arise when the deceased died intestate and had no close relatives who are willing and able to apply for an official certificate of inheritance (“Erbschein”) from the Probate Court and to take possession of the estate. In quite a large number of inheritance cases, distant relatives often have no contact with or don´t even know about their kinship and the potential heirship that accrues to them. The grandfather or great-grandfather generation often died or went missing in the war, persons registers were also sometimes destroyed due to the war. In these cases, it is very hard to demonstrate to the German probate court who the closest living relatives of the decendent are. Researching these relatives sometimes takes years during which time it is unclear who is entitled to the estate.

Who protects the German estate while the next of kin are being investigated?

If this happens, according to section 1962 BGB, the German Probate Court has a duty of care to safe-keep the estate and initiate an official investigation of heir(s). According to section 1960 para. 2 BGB, there are various legal protective measures which the court can take, such as affixing of seals, payment of estate monies into court for safekeeping, deposition of securities or imposing a catalogue of the estate. What needs to be done in a specific case is up to the Probate Court´s discretion. In practice, the route most often taken is for the court to appoint an official curator for the estate, section 1960 para. 2 BGB (“Nachlasspfleger”). Read more on “Nachlasspflegschaft” in cases where the estate may be indebted in this post.

How does the Court appointed German Curator proceed?

The curator, who is usually a lawyer specialised in matters of succession law, is appointed by the competent German probate registry (Nachlassgericht) according to §§ 1962, 1789 BGB. This is what a German court order appointing an official estate curator looks like:

German Court Order Appointing an Estate Curator (Bestellung eines Nachlasspflegers für unbekannte Erben)

The curator is instructed (and authorised) by the German probate registrar to take possession of the entire (German part of the) estate in order to safe-keep it on behalf of the (currently still unknown) members of the community of heirs. His duties are listed in the German Civil Code in sections 1806, 1812 ff. BGB.

What does “Ermittlung der Erben” mean?

Furthermore, the curator has the obligation to start an investigation to identify and contact all co-heirs according to the order of succession which is explained in this post: German Intestacy Rules.

As a first step, the curator will draw up a “family tree” chart in order to get an overview about the kinship of the deceased. If there are no close relatives, it may get difficult to identify the true heirs. Distant relatives, who potentially never knew the deceased may have moved to foreign countries or they may not respond because they think the curator is a fraudster. A curator must therefore be skilled in “detective work”.

Once the curator has been able to ascertain the next of kin who – if more than one person – form the community of heirs (Erbengemeinschaft), each one of them is entitled to apply for an heir´s certificate (§ 2353 BGB) at the Probate Court, which then certifies their respective share in the estate of the deceased. The Probate Court will identify the kinship by birth, marriage and death certificates. When heirs are citizens of another country, the Probate Court will, at least, require legalised copies plus certified translations of the same. It is the duty of the curator to take care about the regulatory matters, to contact family members in Germany and abroad and to collect all necessary documents for the probate application.

Once the certificate of inheritance is issued, according to § 2365 BGB, there is a legal presumption of its veracity, i.e. unless challenged by anyone, the beneficiaries mentioned in the vertificate are able and permitted to administer and distribute the estate among themselves.

For more information on German-British probate matters and international will preparation see the below posts by the international succession law experts of Graf & Partners LLP:

Or simply click on the “German Probate” section in the right column of this blog.

Indebted Estate: How do avoid inheriting your German Relatives’ Debts

Posted on July 3, 2018 by Bernhard Schmeilzl

Make sure to renounce (disclaim) an Inheritance from Germany if you fear that the Decedent had severe Debts

For English lawyers it is a rather shocking concept: The relatives of a deceased person or the beneficiaries mentioned in a Will can be fully personally liable for the debts of the deceased. Without any limitation.For details see here.

Hard to understand from the perspective of Common Law jurisdictions, but this is exactly what the German legal concept of “universal succession” (Gesamtrechtsnachfolge) means: The heir steps into the shoes of the decedent. The entire estate passes onto the heirs / beneficiaries. A personal representative is not necessary (Details on German succession rules here).

Of course, no German wishes to inherit debts. Thus, German statutory succession law does provide for a solution: the so called “Erbausschlagung”, i.e. renouncement of the German inheritance.

To avoid an estate in debt passing on to the heirs who then become liable for it, said heirs (whether under testate or intestate succession rules) can make a formal declaration of renouncement (Erklärung der Erbausschlagung). After such valid renouncement, which must be made within a specific deadline, that person is no longer considered to be an “heir”. Of course, this also means that the person who has renounced the inheritance has also lost all other claims. Thus, the renunciation of an inheritance it is an all or nothing approach.

In cases where it is unclear whether the estate is really over-indebted, it may be the wiser approach to apply to the German court for the appointment of an official estate administrator (Nachlassverwalter) under sec. 1975 German Civil Code. This official estate administrator takes possession of the estate, pays all debts and hands over the residuary estate – if any – to the heirs. Of course minus his fees and costs.

Which German Probate Court do I need to contact for renunciation or the appointment of an estate administrator?

According to German probate court procedure regulations (Sec. 343 FamFG), the renouncement must be made at the probate court (“Nachlassgericht”) competent for issuing the grant. In most cases, this is the court in the district where the deceased had his or her last habitual residence in Germany.

In case a German citizen passes away without having had a residence in Germany, the principal probate registry in Berlin is competent for the proceedings:

Amtsgericht Schöneberg – Abteilung Nachlassgericht, Ringstraße 9, 12203 Berlin, Germany

If a non-German national passes away who did not have a residence in Germany, the court where the assets are located is competent. In case there are assets in multiple parts of Germany, the court which is is approached first becomes competent for all assets in Germany.

Formal Requirements and Deadlines

The acceptance and renouncement of a German inheritance is governed by sec. 1942 to 1966 BGB (German Civil Code). The heirs must declare their renouncement to the competent German probate court within six weeks after being notified about the death and their entitlement as heirs.

This deadline is extended to six months if (i) the heir was outside of Germany at the time of death (irrespective of his/her actual habitual residence) or (ii) if the deceased had his sole residence outside of Germany.

If an heir (regardless of whether appointed as such in a will or whether an heir under intestacy rules) does not validly renounce within the legal deadline, that person is legally deemed to have accepted the inheritance. Then it becomes really difficult to avoid liability for debts of the deceased.

The renouncement has to be recorded at the competent German probate court. Alternatively, it can be given in writing as long as the signature is certified by a public servant (“öffentlich beglaubigt”). The certification can be carried out by a German notary public (“Notar”) or at a German embassy (German Mission) abroad, in the UK this is possible in London and Edinburgh.

The required wording of such a renouncement (disclaimer) of a German inheritance is explained here.

Please note that the formal declaration of renouncement only becomes effective once it is received by the competent German probate court and not already when your signature is being certified, for instance at a German Mission abroad. This must be kept in mind when making the appointment, i.e. there must be sufficient time for sending the original document to the German probate court (a fax or email transmission is not sufficient).

It is not possible to make a conditional renouncement or to renounce only with regard to parts of the estate.

How to renounce on behalf of a minor

In case a parent renounces, then the right of inheritance usually passes on to his/her child or children. In these cases, the right of inheritance has to be renounced for the children as well. In certain situations, the family court’s approval is required and must be submitted to the competent probate court within the above mentioned deadline. The family court’s approval is, however, not required if the minor (only) becomes an heir because the parent who legally represents the minor has already renounced the inheritance. In other words: The law assumes that the parent had good reason to renounce for himself. Thus, is is assumed that the renunciation is also in the best interest of the child. If, however, the child is directly appointed as an heir in a will, then the parent needs the court’s consent to declare a renouncement on behalf of the child.

Certification procedure at a German Embassy abroad

For a certification your identity has to be established by presenting your valid passport or state ID card (Personalausweis). You must also provide a current proof of address (e.g. council tax bill or utility bill). And you need to bring with you the renunciation declaration, i.e. the wording explained above.

After certification of your signatures you will need to send the form to the competent German probate court (see above section “competent court”). Further correspondence regarding receipt and validity of the renouncement has to be carried out directly between yourself (or your legal counsel) and the German probate court. Please keep in mind that the court language will be German only.

Court Fees

A renouncement usually involves two separate fees, one charged by the German Mission for certification, another for the probate court proceedings. The fee payable cash at the German Foreign Mission is the equivalent of 20 Euros in Pounds Sterling according to the day’s exchange rate. The probate court’s fee will depend on the value of the estate.

For more information on German-British probate matters and international will preparation see the below posts by the international succession law experts of Graf & Partners LLP:

Or simply click on the “German Probate” section in the right column of this blog.

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Austrian Probate: How to Access Assets in Austria?

Posted on July 2, 2018 by Bernhard Schmeilzl

British Testator owned a Bank Account in Austria: Will an English Grant be accepted in Austria?

No, unfortunately, it will not. If a British person who owns assets in Austria dies, the personal representative needs to obtain a separate Austrian grant of probate. The English grant is rather worthless in Austria, just as an Austrian (or German or French etc) grant of probate is not being accepted within the United Kingdom, because the UK has opted out of the EU Succession Regulation (even before Brexit).

What kind of Austrian grant needs to be obtained depends on the circumstances of the case:

If the decedent was an Austrian national –OR– if the decedent was habiltually resident in Austria –OR– if he/she did own property (immoveables) there, then the comprehensive Austrian Probate Procedure is unavoidable, the so called “Verlassenschaftsverfahren”. This involves significant paperwork and the executor(s) / beneficiaries must go through an Austrian notary public (Notar).
If the decedent did not live in Austria and owned exclusively moveable assets there (e.g. an Austrian bank account), then a simpler and quicker probate procedure is possible under Austrian law, the so called “Ausfolgungsverfahren” (delivery procedure). This is similar to “re-sealing” a foreign grant. It still requires an Austrian court order, the submission of original documents and certified translations, but the overall procedure is much quicker and simpler.

If, for instance, a deceased British citizen owned a bank account in Austria but his/her main estate was located within the UK, then the executor or administrator of the UK estate can use the English grant (i.e. grant of probate or letter of administration) and apply to the competent Austrian probate court to be accepted by court order (Gerichtsbeschluss) as the “entitled person” (berechtigte Person) with regard to the moveable assets in Austria; see section 150 Austrian Ausserstreitgesetz and sec. 10 EU Succession Regulation.

This means, however, that the probate application in Austria cannot be made until the English grant has been issued. In practice, these Austrian bank accounts or other moveable assets cannot be accessed quickly. And even after the English grant has been issued, there are quite some formal requirements which need to be dealt with. Because even for this simplified venue of an Austrian probate application, the court needs to be provided with the following documents:

An original copy of the English Grant (ideally the “yellow” copy so the Austrian court definitely believes that it is an original; otherwise an apostille would be necessary)
An original copy of the death certificate (or a legalised, i.e. apostilled copy of the same)
Official proof of the decendents nationality.
All executors mentioned in the English grant will have to sign the application
The English Grant and the death certificate will need to be officially translated by an Austrian, court admitted, translator. Whether the English will (if such a will exists) must also be translated depends on the court.

The Austrian probate court fees and the fees of the Austrian civil law notary (who will be instructed by the Austrian probate court to contact the bank) will depend on the value of the bank account. As in Germany, there are statutory fee tables in Austria which determine the legal costs of a probate case.

We saved the best news for last: As complicated as the Austrian probate procedure may be, there is no inheritance tax in Austria. None whatsoever.

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For more information on German-British and Austrian-British probate matters and international will preparation see the below posts by the international succession law experts of Graf & Partners LLP:

Director’s Duties and Liabilities under German Law

Posted on June 22, 2018 by Bernhard Schmeilzl

What are the Duties of Directors of German Companies (GmbH) and Corporations (Aktiengesellschaft)?

Obviously, pretty much all over the world, company directors and CEO’s have a general duty to be loyal, diligent and conscientious in managing the affairs of their company. This is also the case under German law. Directors and CEOs have to bear in mind what is best for the business and act accordingly. In this regard, German courts do apply an objective standard that does not, as a rule, depend on the specific knowledge, education, experience and abilities of the individual director. In other words: If someone takes on the job of a company director, he or she must be up to the requirements. In practice this means, that – depending on the size of the company – the director must hire and supervise qualified staff or outside consultants.

According to German case law, a company director has wide-ranging discretionary powers with regard to how to manage the company. This includes the power to take entrepreneurial decisions, even daring ones (entrepreneurial risk). Always provided, however, that the director carefully assesses the related risks before making such decisions. Under German law, actions (or inactivity) outside the limits of reasonable entrepreneurial conduct or violation of specific director’s duties may result in personal liability of the company director. The major difference between the director of a German Gesellschaft mit beschränkter Haftung (GmbH) and the CEO of a German Aktiengesellschaft is that the GmbH director must always obey the instructions of the shareholders. A vote of the shareholders (Gesellschafterbeschluss) is binding on the company director. In contrast, a CEO (Vorstand) of a German Aktiengesellschaft has much more leeway. The CEO (or the board of executors) manages the corporation as they themselves deem is best:

Section German 76 para. 1 German Stock Corporation Act states:
Management of the stock corporation: The management board is to manage the affairs of the company on its own responsibility.

For example, directors (CEO’s) have an obligation under the German Stock Corporation Act (Aktiengesetz) to protect the company from financial penalties, losses and other financial harm. In their function as trustees of the company’s assets, company directors owe strict fiduciary duties. The Stock Corporation Act also provides for a number of specific duties, including those relating to the maintenance of registered share capital, bookkeeping, and the organization of the company. Finally, directors are also subject to numerous reporting requirements (including a duty to keep the securities market informed and updated) as well as strict confidentiality obligations.

Directors’ Liabilities under German Law

As a rule, only the company is liable towards outside parties, not the individual director or CEO. In other words: Third parties can rarely sue a company director directly for damages or compensation. The company is responsible for the (illegal or damaging) actions or omissions of their dirctors and CEOs. As a consequence, if a director causes financial damage by deliberately or negligently breaching their duty, the company can (and in most cases must) take internal recourse (Regress) against the director / CEO. A simple majority at the annual general meeting can force the company to seek internal recourse against a director. In such recourse proceedings (Regressanspruch), the director must prove that he or she has obeserved the relevant standard of care (Sorgfalt eines ordentlichen Geschäftsführers). The company only needs to demonstrate that it has suffered damages as a result of the actions of the director.

In exceptional circumstances, creditors of the company may bring a direct claim against a director. German statutory law permits bringing direct actions against a director where:

a company is unable to satisfy a claim arising from a violation of a duty by a director;
a company becomes insolvent and a director delayed the initiation of insolvency proceedings causing damage to the creditor; or
he is liable under tort law for a serious breach of duty or for a violation of legal provisions that protect certain individuals of groups of people, such as criminal provisions concerning fraudulent or false representation of the company’s affairs.

In German courts, successful direct claims have been brought against directors based on tort law where, for example, directors have deliberately published incorrect inside information. German court decisions of the last 10 to 15 years show a tendency by the courts to expand the scope of direct tort liability of directors.

For more on German business and corporate law see these posts:

More information on litigation and legal fees in Germany is available in these posts:

Prosecuted in Germany?

Posted on June 11, 2018 by Bernhard Schmeilzl

German defense lawyer Alexander Greithaner specialises in international criminal cases and represents foreign clients in all areas of criminal law. Due to his international family background he is fluent in English, Spanish and, of course, German.

First things first: If accused of a crime or misdemeanor in Germany, never make any kind of statement to the German police, German customs (Zoll) or any other German prosecution authority. This piece of advice sounds commonplace but many clients have already made some kind of statement before contacting a German defense lawyer. This is never helpful!

You need to be aware of the legal situation and the risks first. Then you can discuss with your defense lawyer whether it makes sense to make a statement or not. This is even more important in international criminal cases. While criminal statutes are still mostly national law, globalisation nevertheless has also impacted criminal law and prosecution proceedings. Criminal prosecutors nowadays frequently collaborate with their colleagues in other countries, in particular with regard to organised crime or international taxation issues. For this reason, an “international criminal law” has developed in recent years, which companies and private individuals are confronted with. Thus, a defense lawyer should no longer only think within the box of his or her own national jurisdiction.

Since it is no longer uncommon for German investigative authorities to cooperate with foreign colleagues, this often leads to complete uncertainty for the private individuals and companies concerned, as they are even less familiar with foreign legislation than with the already complicated national regulations, which makes the use of a specialised criminal lawyer indispensable. As a non-German defendant, you need a defense lawyer who does not only know his own legal system but also has a corresponding understanding of international and European legal regulations.

German Lawyer with Mexican roots: Alex Greithaner is fluent in Spanish, English and, of course, German

German defense lawyer Alexander Greithaner works exclusively in the field of criminal law. His main area of expertise is “white collar crime” (i.e. business, corporate, compliance, tax), but he also deals with narcotics law cases, alleged traffic violations and in certain constellations he also defends clients against the accusation of a sexual offence. He is also versant in the law of international extradition proceedings.

His excellent knowledge of English and Spanish enables him to offer his clients comprehensive and cross-border advice in all areas of criminal law on an international level.

If you are accused of any crime in Germany, you should always demand to speak to an English speaking German lawyer. In the south of Germany you may call criminal defense attorney Alexander Greithaner on 0049-941-30794890 or in case of an emergency on the mobile phone number 0049-160-94403335. For other parts of Germany we can recommend qualified criminal defence attorneys.

Basic information on law enforcement and criminal prosecution in Germany: The German Criminal Code (in English language) and the Code of Criminal Procedure are available here. German judge Joachimski here compares the practical aspects of US and German criminal procedure and here is a very informative essay on the German criminal procedure produced by the NZ Law Commision (download here: GERMAN CRIMINAL PROCEDURE – german_criminal_procedure).

For more information about German law, in particular civil litigation in Germany see these posts:

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The law firm Graf & Partners was established in 2003 and has many years of experience with British-German and US-German legal matters.The Anglo-German litigation lawyer team of GP Chambers is well equipped to advise and represent clients from the UK and other English speaking countries. If you wish us to advise or represent you in a German or cross border case, or if you need an expert report on German law, please call +49 941 463 7070 in order to contact German lawyer Bernhard Schmeilzl, LL.M. (Leicester), managing partner and head of the litigation department. Bernhard is also frequently asked by British and US Courts and Tribunals or by legal counsels to provide expert reports and legal opinions on German law.

How to deal with Estates in Austria

Posted on June 11, 2018 by Bernhard Schmeilzl

Probate Proceedings in Austria are very different from those in Germany

If a decedent who was not resident in Austria owned any assets in Austria at the time of his or her death, this Austrian Estate can only be accessed after going through formal Austrian Probate.

Neither an English Grant of Probate nor a German Certificate of Inheritance will enable the executors or beneficiaries to access the Austrian assets, because Austrian banks, brokers, insurance companies and other institutions will ask for a Grant of Probate (“Einantwortungsbeschluss”) issued by the comptenent Austrian Probate Court. In fact, the situation in Austria is considerably more complicated and costly compared to Probate proceedings in Germany or in the United Kingdom. This is due to the fact that Austrian Probate Courts take a much more active role in the administration of an Austrian estate. This generates significant and sometimes unavoidable probate court costs.

Now, what needs to be done if there are Austrian assets?

Under Austrian law, the following rules apply to estates in Austria of persons resident abroad at the time of their death:

Upon the testator´s death, the estate falls to the jurisdiction of the Austrian Probate Court (Verlassenschaftsgericht). The decedent’s assets in Austria are automatically sequestered, i.e. only persons authorised by the Austrian Probate Court (Verlassenschaftsgericht) can deal with them. In contrast to Germany, Austria does not accept any trans-mortal powers of attorney, i.e. any powers of attorney given by the deceased authorising third parties to operate his/her bank accounts or stocks dossiers etc expire on the decedent’s death.

Which local probate registry shall have jurisdiction is determined by whether the decedent owned real estate (immoveables) in Austria or, if not, where the majority of the moveable assets are (e.g. bank accounts).

The Austrian Probate Court will request the following documents (originals or certified copies) to be submitted:

the death certificate
official proof of the testator´s nationality at the time of death, unless this fact is stated in the death certificate,
the documents required to establish the hereditary succession, i.e. the will, birth certificate, marriage certificate etc.

If the decedent was a foreign (i.e. non Austrian) national on the day of death, and if agreements on mutual equal treatment exist between his/her country of origin and Austria, the probate proceedings will be conducted by the competent courts or other authorities of the decedent’s country of origin on the day of his/her death provided that the assets representing the estate are movable property only. In these cases, simplified court proceedings are available, known as the delivery procedure. (“Ausfolgungsverfahren”). More on this re-sealing procedure in this post.

Such delivery procedure only requires a decree issued by the competent foreign court regarding the beneficiary entitlement to the inheritance (i.e. names of the entitled persons or of the executor) to be submitted to the Austrian court together with the additional documents listed above.

If the beneficiaries or executors are resident outside Austria, it is usually necessary to entrust the probate or delivery proceedings to either an Austrian Notary Public or to a German speaking probate lawyer.

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The German-British probate expert Bernhard Schmeilzl specialises in international wills and estate planning for British-German and British-Austrian families since 2001. He knows the typical problems that arise when an English will lands on the desk of a German or Austrian probate registrar or vice versa. Most succession lawyers only know the rules and practical operations of their own jurisdiction. The probate experts at Graf & Partners, however, apply for hundreds of grants each year in England, Germany and Austria, acting either as probate lawyers for personal representatives or acting as executors themselves.

These combined 20+ years of practical experience in non-contentious as well as contentious probate matters in Germany, Austria and the UK make the lawyers of Graf & Partners sought-after lecturers and speakers.

German solicitor Schmeilzl regularly conducts legal seminars and practical workshops on international wills and estate planning as well as on how to obtain probate in Germany, Austria and England. Popular topics for such inhouse seminars for British and German law firms are:

The law firm Graf & Partners and its German-English litigation department GP Chambers was established in 2003 and has many years of experience with British-German and US-German probate matters, including the representation of clients in contentious probate matters. If you wish us to advise or represent you in a German or cross border inheritance case please contact German solicitor Bernhard Schmeilzl, LL.M. (Leicester) at +49 941 463 7070.

Google Analytics vs. GDPR – is that even possible?

Posted on May 20, 2018 by Bernhard Schmeilzl

We are currently receiving many inquiries from uncertain clients regarding the new General Data Protection Regulation (GDPR). During an initial analysis of the homepage, it immediately becomes apparent that most clients use an analysis tool – mostly Google Analytics or Matomo (formerly Piwik). Such tools are useful and indispensable for good online marketing.

But now the question arises: to what extent can these tools still be used to be compliant with the GDPR?

Admittedly, we believe that the GDPR and in particular the German implementation of this has gone far beyond the target. This creates enormous uncertainty in most companies and regular business operations are hardly possible without fear of violating any GDPR standard. But back to the actual topic: Is the tracking of user data of a website still permissible from the point of view of the basic data protection regulation?

Basically no! At least not without a few special adjustments. This is also confirmed by the position of the Conference of Independent Data Protection Authorities of the Federal Government. The statement of the German authorities can be found here:

https://www.ldi.nrw.de/mainmenu_Datenschutz/submenu_Technik/Inhalt/TechnikundOrganisation/Inhalt/Zur-Anwendbarkeit-des-TMG-fuer-nicht-oeffentliche-Stellen-ab-dem-25_-Mai-2018/Positionsbestimmung-TMG.pdf

But now to the real thing: How did I implement Google Analytics in compliance with the law? This requires a look at the provisions in accordance with Art. 6 para. 1 lit. f GDPR. You should therefore follow these steps:

sign a Data Processing Agreement (DPA) with Google. You can find this contract here:

http://static.googleusercontent.com/media/www.google.de/de/de/analytics/terms/de.pdf
accept the addendum for data processing with Google. You may have wondered what the “Data Processing Supplement” option in your Google Analytics account settings is for. This is appropriate here for GDPR. Once you enable this feature, your site visitors’ interests will be protected. It is also important that you enter the following information manually:
1. The person responsible (i.e. the legal person responsible for data processing),
2. A contact (i.e. a person/contact to whom the communications relating to the data processing conditions can be sent,
3. a data protection officer (if to be appointed),
4. an EEA Representative (but this is only important for companies that are not in the European Union).

3. install an easy way for your website users to opt-out.

You can use the following two Java scripts:

first, implement the JavaScript alert:

<a onclick=”alert(‘Google Analytics has been disabled);” href=”javascript:gaOptout()”>deactivate Google Analytics</a>

For the upper code to work, the following code must be installed globally on the website:

<img src=”data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBR AA7″ data-wp- preserve=”%3Cscript%20type%3D%22text%2Fjavascript%22%3E%0A%2F%2F%20Set%20to%20th e%20same%20value%20as%20the%20web%20property%20used%20on%20the%20site%0Avar%2 0gaProperty%20%3D%20’UA-XXXX- Y’%3B%0A%0A%2F%2F%20Disable%20tracking%20if%20the%20opt- out%20cookie%20exists.%0Avar%20disableStr%20%3D%20’ga-disable- ‘%20%2B%20gaProperty%3B%0Aif%20(document.cookie.indexOf(disableStr%20%2B%20’%3Dtrue ‘)%20%3E%20- 1)%20%7B%0A%20%20window%5BdisableStr%5D%20%3D%20true%3B%0A%7D%0A%0A%2F%2F %20Opt- out%20function%0Afunction%20gaOptout()%20%7B%0A%20%20document.cookie%20%3D%20di sableStr%20%2B%20’%3Dtrue%3B%20expires%3DThu%2C%2031%20Dec%202099%2023%3A59% 3A59%20UTC%3B%20path%3D%2F’%3B%0A%20%20window%5BdisableStr%5D%20%3D%20true %3B%0A%7D%0A%3C%2Fscript%3E” data-mce-resize=”false” data-mce-placeholder=”1″ class=”mce-object” width=”20″ height=”20″ alt=”<script>” title=”<script>” />

implement IP anonymization – this will nullify the last two blocks of the IP (e.g. 108.138.0.0) so that it is no longer possible to identify the respective website visitor;

integrate a data protection declaration in accordance with the law within the meaning of Art. 12, 13 GDPR;

don’t activate the user ID.

We hope that with this short explanation we could take away the horror of the GDPR in relation to Google Analytics (as well as further analysis tools).

If you have any questions about GDPR, do not hesitate to contact German lawyer Stephan Hendel who specialises in data protection and IT law. Having a Canadian family background, Stephan is fluent in English and is well aware of the different business mentalities of Anglo-American as well as German entrepreneurs. Our German and international clients appreciate Stephan’s pragmatic hands on approach.

Within the Cross-Channel-Lawyer network, Stephan is the expert for all legal matters surrounding IT, cyber law, data protection issues and compliance with German law.

For more on German business and corporate law see these posts: