How to renounce the debts of your late relative
As we have previously explained here German inheritance law applies the principle of universal succession (Gesamtrechtsnachfolge), which means that the heir (or a community of heirs if more than one person is designated as heir) directly steps into the shoes of a German decedent at the moment of that decedent’s death, under German estate and succession law. All rights and obligations are transferred automatically. There is no interposition of any personal representative, executor, administrator of estate or fiduciary. Executors or trustees are the rare exception in German probate practice (details here).
This is in principle good news for the heir: he or she has immediate access to bank accounts and other assets, especially if the decedent had made a notarial will, since then there is no need of German probate.
However, the principle of universal succession also has the effect that the heirs are personally liable for any debts that the deceased has run up.
Section 1967 German Civil Code states:
- The heir is liable for the obligations of the estate.
- The obligations of the estate include, in addition to the debts of the deceased, the obligations borne by the heirs as such, in particular the obligations arising from rights to a compulsory portion, legacies and testamentary burdens.
According to Section 1967 the heir must also bear the funeral costs.
To be absolutely clear: the liability of the heir is not limited to the estate received. If the total worth of the estate is negative (i.e. more debts than money, assets or property) then the heir must pay off these debts with his own private means that he or she already had before the inheritance.
If the estate is obviously negative (i.e. the deceased was heavily indebted) and the heir knows this, then the choice is easy: The heir will simply disclaim (renounce) the inheritance. Time is extremely important here because there is a six week deadline! The declaration to disclaim heirship must be made in person before a German notary or the Probate court (Section 1945 German Civil Code).
After these six weeks the inheritance is legally considered as accepted and the heir must pay all debts of the deceased even if the debts are higher than the assets. The most dangerous situation is therefore where the heirs are not aware of such debts. Therefore, an heir in Germany should – if in doubt about the financial situation of the deceased – immediately examine all documents and evaluate whether there is any risks of the estate being insolvent.
If the heir is unsure whether the entire estate is positive or negative then there is the alternative of applying for curatorship, which must, however, also be done within the same period (see here). More information on the issue of “Erbausschlagung” (disclaiming heirship) is available, however only in German language, on wikipedia.
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:
- Most Germans die without a Will (German Intestacy Rules)
- Formal Requirements to set up a valid Will in England, Scotland and Germany: What are the Differences?
- The Perils of German IHT and Gift Tax
- Basics of German Inheritance and Succession Law
- Executors and Trustees in German Inheritance Law
- How to apply for a German Grant of Probate
- The Infamous German Community of Heirs – And how to avoid it
- Germans Heirs are Personally Liable for Debts of the Deceased
- International Wills and Estate Planning for British-German Families
- Prove German Wills for English Probate
- Disputed Wills and Contentious Probate in Germany
- Disinherit your no-good children? Not so easy in Germany
- Don’t be afraid of Clients with Foreign Assets!
- Can foreign Taxes be set off against UK Inheritance Tax?
Or simply click on the “German Probate” section in the right column of this blog.
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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.