date | theme

8. October 2017 | Avoidance of inheritance tax: 6 legal tax tips

12. May 2018 | Reduction of inheritance tax/gift tax: usufruct of money – fixed money – bank balances

10. July 2019 | Selling real estate to children: Depreciation + Save inheritance tax

24. July 2019 | Saving inheritance tax through chain gifting: deadlines and criteria

12. August 2022 | Testament and inheritance contract: How to correctly regulate the arbitrary succession (this article)

In the context of succession, a distinction must be made between the legal and the arbitrary succession. The arbitrary succession serves the individual succession planning. It can be regulated by will or inheritance contract. On the other hand, the legal succession is that which is prescribed by law and applies, insofar as the decedent has not individually determined anything. In the following, we explain how you effectively draw up a will or an inheritance contract correctly.

1.Succession of succession by will and/or contract of succession

The arbitrary succession denotes the succession specifically determined by the deceased. The deceased can regulate the succession individually by a disposition of death routes. It has two options. On the one hand, he can draw up a will and on the other hand regulate the succession by succession contract. In each case, a plurality of final decisions can be contained therein. Nevertheless, it is important that the will is drawn up correctly or the inheritance contract is effective. Therefore, we explain how you correctly and effectively regulate the arbitrary succession and what you need to pay attention to. How, on the other hand, the legal succession is structured and who inherits to which parts, we have explained in one of our other contributions.

2nd succession by will

2.1 Formal requirements for wills

A will is a legal transaction which consists of a unilateral declaration of intent which is not in need of reception and which contains final dispositions. The ability to build a will is called testability. It depends on certain ages. Minors under the age of 16 cannot make a will. Over 16 years they can make a will by hand. However, with regard to the form of the will, special features must be observed. In principle, adults are unlimited testable. However, this does not apply if, at the time of the establishment of the will, they are unable to see the meaning of the declaration of will and to act according to this insight because of a pathological disturbance of mental activity, mental weakness or disturbance of consciousness. Nevertheless, these can also test effectively in a light moment.

The Ordinary Testament is the will to write a notary and the will by hand. The latter must be written by hand and also signed. In it, the testator should indicate on what date and where he wrote the will. If this information is absent and there are therefore doubts about the validity of the will, the will is to be considered valid only if these findings can be made elsewhere. The indication of the date is important because in the case of conflicting content the younger testament applies. If several wills are available and the time of establishment or the order of establishment cannot be determined, the undated will is considered to be the older one. The will can also be given in official custody so that it is protected against corruption and loss. In acute emergency situations, the testator can also issue a will before witnesses, so-called extraordinary will. However, these have only a limited three-month period of validity.

2.2. Community Testament

In addition to the will of a single testator, there is also the common will of two spouses. This applies to the death of both spouses. The spouses at the establishment have the will to testify together. This will must emerge from mutual arrangements. Otherwise, the common testament has no mutual binding effect. Nevertheless, the common will is two dispositions of death. It is sufficient, however, to write all dispositions by one spouse with the signature of both spouses.

2.3 Reasons Why Testament Fails

When testators write their wills themselves, there are some sources of error. The following reasons are the most common ones leading to ineffectiveness. For example, there is a violation of form if the will was written on the computer. Later changes can also render the will ineffective. If the inheritance used ceases, a replacement inheritance should be used, otherwise the legal succession applies. In addition, many testers assume that German law applies if they are German citizens. However, the last ordinary residence is decisive. Therefore, German citizens can determine the applicability of German inheritance law in the will. In addition, a complete loss of the right to a compulsory share can be achieved by the fact that the deceased takes up his habitual residence in a country which does not have a compulsory share right. Even a form-effective transmortal precautionary power of attorney can make the certificate of inheritance dispensable. Such a precautionary power of attorney need not be notarized. Rather, the cost-effective notarial signature certification is sufficient.

3. succession by contract of succession

A contract of succession is a contract composed of two mutually related declarations of intent in need of reception. This results in contractual ties. All previous or subsequent final willing dispositions which legally impair the position of the person covered by the inheritance contract will therefore become invalid.

However, only inheritances, legacies and conditions can be bindingly ordered. Nevertheless, these final willing dispositions are not only binding because they are contained in a contract of succession. Rather, even without binding effect, the partners of a contract of succession can make any final decision in a contract of succession that they could also make in a will. It is therefore necessary to determine in detail which arrangements are binding. In addition, the succession agreement does not prevent the deceased from disposing of assets through legal transactions among living persons.

The deceased must have unlimited legal capacity at the conclusion of the succession contract. Therefore, he must be 18 years old. The contractual partner, on the other hand, may also have limited legal capacity. The contract of succession shall be concluded before the notary in the simultaneous presence of both parties. In doing so, the person can be represented at the conclusion of the inheritance contract. Personally, however, both parties must be present if they both make final decisions in the inheritance contract.

4. Permissible content of will and contract of succession

3.1. Establishment of inheritance by will or contract of inheritance

However, the decedent cannot arbitrarily dispose of the decedent even within the scope of the arbitrary succession. Rather, the content must be allowed. The appointment of a successor shall be the determination of one or more universal successors and the amount of their participation in rem in the succession. As a result, the decedent may deviate from the legal succession in whole or in part. As a result, the decedent cannot turn individual estates directly to a single joint heir. Rather, the estate always passes as a unit to the heir or heirs. Only by means of a division order can the testator determine that the joint heirs should proceed in a certain manner in the dispute between the community of heirs. However, this regulation does not have direct rights-assigning effect either.

3.2. Disinheritance

However, in any arbitrary inheritance lies a complete or partial disinheritance of the legal heirs. In addition, the decedent can disinherit a legal heir, without instead a willful heir. § 1938 BGB emphasizes that the decedent can also exclude individual legal heirs from the succession and otherwise leave it with the legal succession. Unless a corresponding will of the decedent can be determined by way of interpretation, the disinheritance according to § 1924 (3) BGB does not also apply to descendants of the disinherited. Thus, if a parent inherits a child, its descendants take its place.

Disinherited legal heirs are entitled to a compulsory share. As a result, the deceased is forced into family solidarity for death. The descendants, parents and spouses of the deceased are entitled to a compulsory share. They then receive a payment claim against the heir, who is not aimed at the delivery of certain objects, but only at money.

In terms of amount, it amounts to half the value of the legal inheritance of the person entitled to the compulsory share. The entitlement to a compulsory share is to be reduced if the deceased has already made a voluntary contribution to the beneficiary of the compulsory share during his lifetime and has determined that this contribution should be counted against the compulsory share. To this end, the grant must first be added to the estate. From the compulsory share entitlement calculated on the basis of the increased estate value, the grant is then again deducted. Conversely, the entitlement to a compulsory share is to be increased if the deceased has reduced his property in the last ten years before the succession by donations to third parties. Otherwise, the deceased could de facto devalue the fundamentally irrevocable right of compulsory participation. Here, too, the gift is to be added to the estate and the compulsory part is to be calculated on the basis of the thus increased estate value.

Only in conclusively enumerated cases can the decedent also withdraw the compulsory part beyond the disinheritance. The reason for withdrawal must be stated in the disposition of property upon death.

3.3 Legacy

By inheritance within the meaning of § 1939 BGB, the decedent can grant a funded person a debt-law claim to grant any property advantage against the heir. Thus, for example, the person covered does not receive ownership of a bequeathed thing through the legacy, but only a debt-law claim against the person complained of transferring ownership and handing over the thing. By inheritance contract a legacy can be binding and arranged in the common testament alternately.

3.4. edition

By imposing an obligation within the meaning of § 1940 BGB, the decedent can oblige the heir or legatee to perform a specific service without the beneficiary being granted a right to this service or without a beneficiary having to exist at all.

3.5.

With a division order according to § 2048 BGB, the decedent can regulate how the estate between the individual joint heirs must be dealt with. Such a regulation may be necessary because the estate as a whole is transferred to the joint heirs as a community of heirs and individual estates are transferred to individual joint heirs only when the community of heirs disputes. With the division order, the testator can regulate how the dispute between the joint heirs should take place and thus prevent disputes.

The assignment of an individual property by division order is therefore only at the debt level and obliges the heirs. However, the division order does not alter the succession quotas ordered by the decedent or existing by law. If an heir is to receive an estate whose value exceeds the value of his succession quota, the deceased must at the same time impose a duty of compensation on that heir in favour of the other joint heirs. The division arrangement becomes obsolete if the object, the transfer of which the division arrangement orders, is no longer present in the estate in the event of succession.

Conclusion on the will and the inheritance contract

Succession can be regulated by a will or an inheritance contract. It can be seen that through an inheritance, they also always disinherit another legal heir by changing the quota or establishing a new heir by reducing his inheritance quota. If you want to arrange individual objects to an heir or want to rain the dispute beforehand, you should think of a division arrangement.