Entangled in German Probate Proceedings?

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.

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.

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

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.

– – – –

Solicitor_SchmeilzlThe 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.