The Inheritance Contract in Germany (der Erbvertrag)

The inheritance contract (Erbvertrag) is a binding agreement between at least two parties, including the testator.

It is a means of disposition of property and assets following the testator’s passing. An inheritance contract is less flexible and subject to more robust legal requirements than a will.

Changing or cancelling an inheritance contract involves agreeing with the other parties involved in the agreement, and it must be notarized.

An inheritance contract allows the testator to place particular demands on the part of the prospective heir. An inheritance contract may consist of the testator leaving their property to the heir; however, the heir may face obligations to take care of the testator in their old age.

An inheritance contract can be preferable to a will in some instances. An example of a situation where an inheritance contract is preferable is where the testator is not married to their partner.

Generally, spousal wills are primarily for married couples or registered partners, but the inheritance contract does not face such limitations. It provides solid legal protection to the individuals party to the agreement and can help prevent legal disputes from arising, such as those that may result in the event of leaving a will.

Another case where an inheritance contract may be preferable is business succession planning. Entrepreneurs who have built a successful business may face challenging questions concerning inheriting the business. Whether they want to keep the company in the family, hand their share over to their business partners or look for another option, an inheritance contract is advisable in such scenarios.

Early planning and comprehensive documentation of the process are advisable.

At Schlun & Elseven Rechtsanwälte, our full-service approach means that our lawyers provide advice on business succession planning requirements from German inheritance law and German corporate law perspectives.

There are stricter legal requirements for the inheritance contract than for a will. Under § 2276 German Civil Code (BGB), an inheritance contract can only be deemed valid if a notary notarizes it. Therefore, parties can’t draw up their own agreements without professionals involved. The contract must also be in writing and signed by all parties involved.

The parties to the inheritance contract must have the full legal capacity to make such agreements.

Other requirements for the inheritance contract include the need to comply with German inheritance law, cannot violate public policy and must clearly state the distribution of assets and the legal rights and obligations involved.

There will be variations within the inheritance contracts with the contents of the individual agreements.

The contract should outline who is entitled to the testator’s estate. A prerequisite of the inheritance contract is that at least one binding disposition is made.

Such dispositions will vary between different cases as they can consist of a condition, decision or appointment made by the testator. An example of a condition would be that the heir will receive the property and assets of the testator, but in return, they will look after the testator in their old age.

To determine what conditions are possible within inheritance contracts, it is advisable to consult with an expert in inheritance law.

One contract element that can be agreed upon is a rescission clause whereby the testator can exit from the inheritance contract. Alternatively, there can be a clause allowing the testator to render the inheritance contract ineffective by a future will. However, both sides need to be aware of what they are signing, and an agreement from both sides is required.

Compared to a will, an inheritance contract is more difficult to amend.

Parties involved cannot make spontaneous unilateral changes and must usually agree with the other contracting party. After all, it is a legally binding contract. Furthermore, the inheritance contrac