Addiction, laziness or a lavish lifestyle: There are various reasons why some wealthy people want to relieve close family members of their inheritance. But it’s not that easy.
Anyone who has something to inherit usually thinks about how the estate should be distributed. And sometimes the decision is made to let one or the other get nothing. Those who were excluded in this way might not even get their compulsory share of the inheritance. Is such a complete exclusion even possible and sensible? And if so, how does it work? Possibilities and limits of excluding relatives from inheritance.
“Maxi inherits nothing.” If such sentences are in the will, close relatives such as spouses and children can get nothing from the inheritance. Those who are booted out in this way are nevertheless entitled to the compulsory portion (section 2303 of the German Civil Code). “It is the constitutionally guaranteed minimum participation in the estate,” says lawyer Julia Roglmeier from Munich.
Denying relatives this participation in whole or in part is a complicated undertaking. If you want to make this legally secure, you usually have to involve those affected.
Spending one’s own assets during one’s lifetime is the easiest way to reduce the estate and thus the compulsory portion. Treating yourself to something, for example spending money on nice trips, is a legitimate way to do this, says the Munich notary and chairman of the Bavarian Notaries Association, Winfried Kössinger.
With this variant, however, less is left over for the heirs. Donations to third parties during your lifetime also reduce the estate. However, the ten-year period with which donations are included in the calculation of the compulsory portion can become a snare. Kössinger explains that only if more than ten years have passed between the donation and the death of the deceased does the former no longer count.
Another alternative is to move your assets abroad. “The Anglo-American region, for example, has no right to a compulsory portion,” says Roglmeier. Austria abolished this right for parents a few years ago – those who move their own center of life to the neighboring country avoid the compulsory portion for father and mother. Although it is rather the exception for children to pass something on to their parents, it can certainly happen in the event of an accident, for example.
Lawyers and notaries see the waiver of the compulsory portion as a safer, more common way of excluding heirs. This is regulated in a contract, which is to be certified by a notary. This is stipulated by the German Civil Code (section 2348 BGB). The contract requires consent. In contrast to the other options, those entitled to a compulsory portion must therefore be informed and agree to the intention to leave them out.
The waiver agreement can be useful in patchwork families, for example, or if, for example, children are to be compensated during the lifetime of a testator in order to protect other children or partners from their inheritance claims. According to Roglmeier and Kössinger, regulations in wills or inheritance contracts could be simplified in such constellations, among other things. “Clear conditions are created during your lifetime,” says the lawyer.
As a rule, however, hardly anyone will want to voluntarily renounce an inheritance. It is therefore common practice to offer financial compensation. The amount is negotiable. In the experience of notary Kössinger, less is generally offered than the waiver would be legally entitled to based on the current financial situation of the future testator. In return, there is immediate money.
This means that the waiver does not care how long the testator will live and how much property is actually left for distribution after his or her death. “Protection against loss of assets” is how Kössinger describes the incentive of the severance payment from the point of view of those who renounce.
The compulsory portion contract can be designed individually. The testator can consider whether the waiver should also include descendants of the waiver, whether someone should only renounce the inheritance and the compulsory portion in favor of certain relatives – such as parents, siblings and children – or in general. In addition, it is possible to limit the waiver of certain objects and real estate. On the death of the testator, the waivers will receive their compulsory portion, but reduced by the value of the previously specified items.
In order to prevent later disputes about the severance payment, Julia Roglmeier advises enclosing an asset overview of the future testator with the contract waiving the compulsory portion, so that the assessment basis for the payment becomes transparent.
Wealth cheating is not allowed. “Otherwise the contract can be subsequently attacked with the argument of immorality.” For this reason, it is also taboo to want to take advantage of emergencies or the inexperience of waivers with the aim of urging them to agree to the contract.
(This article was first published on Monday, October 24, 2022.)