Executors and Trustees in German Inheritance Law

There exist, as we have explained here, fundamental differences between the inheritance law concepts of the UK and Germany. Since UK probate law requires a personal representative, many testators in the UK appoint an executor in their will. In Germany, however, where a “personal representative” is unknown due to the principle of universal succession, the inheritors come into ownership as well as into possession of the estate automatically and directly. Therefore, appointing an executor (Testamentsvollstrecker) is the exception in Germany, used only in cases where the testator expects the future inheritors to quarrel or where the testators will probably still be under age at the time of inheritance. Furthermore – since the concepts are different – the words “executor” and “Testamentsvollstrecker” are false friends, they have similar but not identical legal powers and obligations.

Now, when a British citizen had all or parts of his estate in Germany at the time of his death, there is the need for a German grant of probate (called “Erbschein”). The probate procedure is explained here and here.

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When a deceased UK Citizen owned Assets in Germany

How to get access to an Estate under German Inheritance Law

When a UK citizen dies while having possessions in Germany (bank accounts, deposits, shares, insurance claims or property), one must first determine whether the estate is governed by German hereditary law and thus falls into the competence of German probate courts: Continue reading

Disinherit your no-good children? Not so easy in Germany

According to German inheritance law, close relatives have a right to claim a portion of the estate, even if the testator did not want to leave them anything and has consequently disinherited them. This so called “Pflichtteil” is mostly translated with “statutory share“, “forced share” or “compulsory share“. However, it is difficult to find the correct English word, because this concept does not quite exist in the English or US common law systems. And even to many German heirs this concept comes as a surprise.

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Basics of German Inheritance Law (German Probate)

German inheritance law differs very much from UK law and there are many formal requirements which must be followed. A good starting point for basic information about the law of succession in Germany (or any other European country for that matter) is the official EU website “Successions in Europe“. It answers a few basic questions and contains helpful links for more detailed research.

In our CrossChannelLawyers blog we try to dig deeper in regard to many issues of British-German and US-German succession rules, inheritance tax, estate planning and international probate. For starters, let us quickly explain some major differences between UK and German laws of succession.

In Germany, heirs (Erben) are vested with possession, administration and distribution of the estate!

One fundamental difference between UK and German inheritance law, having huge impact on probate procedures, is the German “principle of universal succession“. While in the UK the rule is that a personal representative takes possession of the estate and will eventually distribute the (remaining) property to the beneficiaries the German system is completely different: Here the heir immediately and directly acquires all assets and even all liabilities of the deceased. In other words: all rights and obligations that the deceased person had are automatically transferred onto the heir, the second the devisor dies. Neither a court ruling is necessary, nor a personal representative, executor or trustee. Now, a German heir will in most cases still need a grant of probate (called “Erbschein“) because banks, insurance companies etc will want to see this document for their own protection. If there is more than one heir (for example the surviving spouse and children of the deceased), they form a so called “Erbengemeinschaft”, a “community of heirs”. They own the estate together and have to agree between themselves on how to divide and distribute the assets among them. Which quite often leads to quarrels and legal disputes. So most German inheritance lawyers recommend to draft a will in which the testator (i) either names only one heir and orders this heir to pay out bequests (Vermächtnisse) to the other beneficiaries or (ii) name more than one heirs but include in the will how this shall be distributed among them.

The principle of universal succession also has the effect that the heirs are personally liable for all debts that the deceased had (details here). This can be very dangerous if the heirs are not aware of such debts because there is a six week deadline to reject one’s right as heir. After these six weeks the inheritance is legally being regarded as accepted and the heir must pay all debts of the deceased even if the debts are higher than the assets. Therefore, an heir in Germany should examine all documents and evaluate whether there is a risks ob the estate being insolvent.

A third major difference is inheritance tax: While in the UK there is one nil-rate band for the entire estate and the amount above that is taxed with 40 percent, the German situation is much more complicated. Not the estate as such is being taxed but each individual beneficiary must evaluate for himself whether he has to pay inheritance tax and is personally responsible to contact the tax authorities. Thus, in contrast to the UK, German probate courts will issue the Erbschein without regard to taxation issues. Spouses and close relatives have rather high tax exempt amounts (Steuerfreibeträge), a spouse for example has 500,000 Euros plus (!) the familiy home; each child has 400,000 Euros. Beneficiaries that are not closely related to the deceased, however, have much less tax exempt amounts (usually 20,000 Euros) and must also pay higher tax rates than close family members (details in the table of German IHT rates here). So one cannot generally say whether an heir is better off according to German or UK inheritance tax laws, it all depends on the individual situation.

Then, finally, there is the infamous “Pflichtteil” (“forced share“, “elective share” or “compulsory share“) which the spouse and other close relatives can claim if they are disowned in a will. The details of this legal concept are explained here and here.

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 “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.