German Succession Lawby Dr Nikolaus GEIBEN
Dr GEIBEN & KOLLEGEN
1) German International Private Law:
Succession is governed by the law of the State of which the deceased was a national at the time of his death. Independently of the nationality a person may designate the German law to govern the succession for immovables situated in Germany.
If the succession is governed by a foreign law and if there is situated a real estate in Germany, there does not exist special rules prevailing (partly) the applicable foreign law.
2) Intestate Succession[1]
If no valid testamentary disposition exists, the statuary heirs are the decedent’s next of kin and his spouse. Heir is the state if there exist neither kin nor spouse statuary.
Basically, the German Succession law follows the system of succession according to classes.
The first class are the direct descendants of the deceased: children, grandchildren etc. Class two is determined by the parents and (if they are predeceased) their direct decedents, class three by the grandparents and (if they are predeceased) their decedents and so on. The presence of relatives of a higher class exclude the succession of a lower class: If the deceased has children (or - if they are predeceased – grandchildren, etc.) belonging to the first class, parents do not inherit. Alongside, independently of the succession of the above mentioned classes, the spouse gets a fourth of the estate. If the couple lived under the statutory matrimonial property regime of the community of acquisitions, the spouse inherits another fourth.
3) Testamentary disposition
The testator is widely free to make his testamentary dispositions.
The ordinary will is the holographic will or the public will before a notary. The German Civil Code provides for spouses the possibility of a joint will, which also can be made holographic if both spouses sign the will. Furthermore, the testator can make testamentary disposition by means of a contract of inheritance, which has to be recorded in the simultaneous presence of the parties.
A testamentary disposition who does not comply the legally required form is invalid. In German law there exist special provisions concerning the contest of a will especially in cases of duress or mistake of expression.
4) Disclaimer of an Inheritance, Renunciation, Administration of the Estate, Insolvency[2]
The disclaimer of an inheritance has to be done within six weeks. The time limit begins to run only when the heir has knowledge of the descendents death and the concrete basis for appointment (but there final time of preclusion after 30 years after the descendents death).
German law even provides (inter vivos) the possibility of the renunciation of future successional rights (Erbverzicht). Such a contract requires the authentification of a notary.
Heirs are liable for the debts of the descendent. If the limit of the disclaimer expired, there still exists the possibility to apply the administration of the estate (Nachlassverwaltung) or an administration in bankruptcy.
5) Statutory forced share (Pflichtteilsrecht)
The testamentary’s freedom is restricted by the statuary forced share: The testor’s children, parents and spouse (as they are close relatives) can claim one half of the value of the intestate shares as their statutory forced share (there exists a further special provision for spouses).
6) Estate tax law
Every single heir is liable to pay inheritance and/or gift taxes (for gifts within the last 10 years before the decendent’s death) pursuant to the Inheritance a Gift Tax Law.
The tax rate varies from 7 – 50 %, depending on the degree of kinship and the value of the estate in case of inheritance. For the spouse, children and parents the rate starts with 7 %, is i.e. 15 % (value over 512.000 €) and rises until max. 30 % (value over 25,5 Mio.). For parents (in case of gifts) and brothers or sisters (and some other relatives in a similar position) the rate of taxation is min.12 %, i.e. 22 % (value over 512.000 €) and max. 40 % (value over 25,5 Mio.). For all other heirs the rate starts with 17 %, is i.e. 29 % (value over 512.000 €) and rises until max. 50 % (value over 25,5 Mio.).
For close relatives there exist tax exempt amounts: The spouse has the biggest amount of exemption with 563.000 € (307.000 € tax free + 256.000 € “private provision” [Versorgungsfreibetrag]); the children are exempted with an estate under 205.000 € plus an exemption for “private provision” (Versorgungsfreibetrag) until the age of 27 (it depends on the age: varying from 52.000 € [under 5 years] and 10.300 € [20-27 years]).
For other persons the tax free amounts are less, i.e. parents 51.200 €, brothers and sisters 10.300 € and all others 5.200 €.
[1] CF. Ebke/Finkin, Introduction to German Law, The Hague 1996, p. 2278 foll.
[2] CF Ebke/Finkin, ob. cit., p. 292 foll.
Niko GEIBEN,
Member of EUROJURIS DEUTSCHLAND, Board of JURISMUS INTERNATIONAL
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