Property inheritance in Germany is not straightforward. On its face, inheriting a property sounds promising; however, if that property costs more to run than it brings in, it can involve an amount of risk. There can be further complications around ownership, such as: are you the sole owner or other owners? Was the property left to you in full or only partially? Such issues can lead to conflicts and even legal disputes.
Schlun & Elseven Rechtsanwälte provides comprehensive assistance to our clients in all matters of property inheritance in Germany. If you require legal support, please do not hesitate to contact our firm directly.
Property Inheritance in Germany: Without a Will
Under German law, it is not necessary to draw up a will. Wills give the testator more control over how their property and assets are divided following their passing, but there is no requirement for this to be done. However, should they not draw up a will, the statutory succession will occur (which may be deemed suitable). Under statutory succession, the testator’s closest relatives will find themselves in line for inheritance. In this case, spouses and children will be at the forefront, with parents coming into the picture should they not have children to pass on their assets.
Should there be children and partners/spouses in the picture, the property (or properties) the testator personally owns may go into a community of heirs scenario. It should be noted that although drawing up a will does give the testator a certain control over how the assets are dealt with, they do not have complete control to do as they please.
German law provides for the compulsory share of the inheritance (der Pflichtteil). This mandatory share applies to the deceased’s children, spouse/partner, and other family members, depending on the situation. The most important aspect of the Pflichtteil to remember is that the children and some other family members (statutory heirs) cannot be left without inheriting something. There are some exceptions to this rule, and the statutory heirs have the power to waive their inheritance rights, but it must be considered when designing the will.
Property Inheritance: Owners and One Heir
Property inheritance cases involving one heir are (generally) the most straightforward form of property inheritance. In this scenario, the testator owns the property directly without others having shares in the ownership, and they leave it to a single heir. The sole heir, in this case, has the property ownership transferred to them after the testator’s passing. From there, the heir needs to register the property under their control, and following this action, the heir is the new property owner. However, it is not advisable to rush into accepting an inheritance, as we will explain in greater detail.
If the property is co-owned and there is another owner, the testator can leave their share to their heir. This happens quite often with married couples or business partners. The co-owner does not lose their share of the property to the heir in this scenario. Should parties wish to end the co-ownership, they can seek a cancellation claim under § 749 BGB and look to sell the property to a new owner.
Risks involved with Property Inheritance in Germany
Accepting inheritance is not always recommendable. Sometimes property inheritance can arrive with significant debts, and thus the property may end up costing more money and resources to run than it is worth. When it comes to deciding whether to accept or reject a property, the heir has six weeks in which to settle. This is not a considerable amount of time, and it is essential to use this time carefully. Accepting entire inheritance for a property with significant debts or one in which other parties have extensive access rights may not be the best action one can take. Remember, when deciding to accept or reject a property, the acceptance involves receiving the inheritance entirely, including the good and the bad.
If the testator was in debt at the time of their passing, or if they were weighed down with significant loan repayments, accepting the inheritance will result in you inheriting these debts. Similarly, if you are in debt or have serious issues concerning insolvency, your creditors may be able to get access to the property. In such a scenario, it may be better for your next of kin to receive property to ensure that it does not go into the hands of these creditors.
Other than these scenarios, there are other reasons why inheriting property may not be of benefit to you:
- The property cannot be used for a purpose you have in mind,
- Personal reasons,
- Restoring the property may cost too much,
- The land is not of significant value or is unsuitable for development plans,
There are many good reasons for not accepting a property. However, it is advisable to contact a legal professional or another advisor to discuss the ramifications of such a decision. Properties can, of course, be sold following the inheritance if need be.