What is a German Erbengemeinschaft (Community of Heirs)?
Under German succession laws and probate rules, if there is more than one heir (Erbe), these co-heirs (Miterben) automatically form a so called Erbengemeinschaft (community of heirs), see section 2032 German Civil Code. We have explained the legal nature of the German Erbengemeinschaft in this post here.
Such a community of heirs can be compared to a business partnership where assets (i.e. the estate of the deceased) are jointly owned by these partners. Being part of such an Erbengemeinschaft can be living hell for everyone involved because, in order to make binding decisions, they must all agree on everything unanimously (einstimmig). Thus, one single co-heir can block everything by simply saying no to any plans brought forward by the other co-heir(s). If that is the case, the estate cannot be distributed, property can’t be sold, it can’t even be rented out. Everything is in stalemate. As a consequence, you can be stuck in a quarreling community of heirs in Germany for years or even decades. And the worst part of it: While the assets cannot be quickly liquidated and the estate is not being distributed among the beneficiaries, the co-heirs are still immediately liable for German inheritance tax.
In situations like these, the last resort of a German co-heir is to apply for a Teilungsversteigerung (forced public auction of the German estate), which, however, also takes months and is rather costly (see below). Before triggering this nuclear option of a forced auction of the German estate, the co-heirs should consider the other options to rid themselves of their German inheritance.
4 Ways to leave the Erbengemeinschaft
According to Paul Simon, there are 50 ways to leave your lover, but there are effectively only four ways to get out of such a quarreling community of heirs abroad:
- formally renounce the inheritance (Erbausschlagung) within the statutory deadline set by German succession law (i.e. 6 weeks or 6 months, depending on residence). If the other co-heir(s) is/are willing to pay you a compensation for renouncing your share, this may be the best approach. The problem with this is that it can only be done before a German notary public or a German consular officer, i.e. this involves travelling and legal fees. Thus, while renouncing the German inheritance is a must in case you fear that the estate is indebted (more here), it may be a somewhat cumbersome approach in other cases. Also, if nobody offers you a fair compensation for your share, then the statutory deadline gives you not enough time to negotiate with them.
- sell and transfer your share in the German estate (Verfügung über den Erbteil), see section 2033 German Civil Code: Sometimes, there is one of the co-heirs who is interested in buying your share, for example because that co-heir, unlike you, lives in Germany and maybe wants to keep for himself a property which is within the estate. Or that person wants to strenghten their position within the community of heirs. Either way, you can then sell your share to that person. If the potential buyer is an outsider, i.e. someone who is not already a co-heir, the other co-heirs have a statutory pre-emtion right, s. 2034 German Civil Code. The idea is to avoid the co-heirs (who are in most cases relatives of the decedent) having to deal with a total stranger as a co-heir of the estate. However, according to s. 2033 BGB, any such agreement on the sale and transfer of a share in a German estate does also require the involvement of a German notary or consular officer (same as renunciation).
- a not so well known approach, even among German probate lawyers, to get out of an Erbengemeinschaft is the so called “Abschichtung“, where a co-heir declares to waive all rights and entitlements in the estate. As a consequence, this co-heir quits the community of heirs and his/her share is attributed to the remaining co-heirs (similar to what happens if a joint tenant passes away). The advantage of this Abschichtung is that there is no need for a notary or consular officer. The disadvantage for the quitting co-heir is that to the outside he or she remains liable for the debts of the estate. This is because the Abschichtung is merely an agreement among the co-heirs, it does not affect the formal position of a c-heir towards the outside world. Still, in a case where there definitely are no significant debts and one of the co-heirs wants to quit, either with or without compensation from the other co-heir(s), this approach may be the simplest and certainly the quickest.
- finally, as mentioned above, if all else fails due to the unanimity principle, each co-heir can apply to the local German court (see here) for a forced public auction (Teilungsversteigerung) of either the entire estate or specific assets, in particular German property (real estate). As a second step, the co-heir must then apply to a (different) German court for the estate to be distributed (“Erbauseinandersetzungsklage” or “Erbteilungsklage”). Sounds complex and expensive? It is. That’s why I called it the nuclear option. However, sometimes it is the only resort. And: in many cases the co-heirs suddenly do come to a settlement as soon as someone applies for the forced auction and/or files for the distribution of the estate. If such an amicable settlement is reached, the contentious probate court proceedings can of course be terminated immediately to save costs. More on settling a lawsuit Germany is explained here.
What’s the best approach for me?
That entirely depends on the case. In order to evaluate the best way forward, you need to consider a number of factors: Is there the risk of significant debt with regard to the German estate? What is the value of the entire estate? Do you want to get the maximum financial benefit or do you just want to get rid of the burden of being a co-heir? Are the other co-heirs reasonable or is everything irrational and highly emotional? How much time and money are you willing to spend to sort the German estate out? Would anyone be willing to buy your share in the estate?
You should discuss all this with a German probate law expert and come up with a legal strategy. Sometimes, the other co-heirs are even grateful if someone takes the lead and comes up with reasonable proposals. If not, then it may be the best way forward to sue quickly and thus to force the other beneficiaries to agree to a solution in order to prevent the costly public auction.
For legal advice on German civil procedure, German probate and how to successfully litigate in Germany, contact the international litigation experts, trial lawyers and probate experts of GrafLegal. For more information on German-British probate matters and international will preparation see the below posts:
- 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
- Can foreign Taxes be set off against UK Inheritance Tax?
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 lawyer Bernhard Schmeilzl, LL.M. (Leicester) at +49 941 463 7070.