An inheritance includes not only assets but also debts. Those who inherit should inform themselves early to avoid financial risks.
When someone dies, their debts don’t automatically disappear; instead, they become part of the estate and can be passed on to the heirs. An inheritance can therefore include not only assets like cash, securities, or jewelry, but also liabilities.
Transfer of debts to heirs
In principle, assets and debts pass to the heirs through universal succession. This means that the heirs inherit not only the assets but also the debts of the deceased. Typical debts that can be inherited include:
• Outstanding Invoices and Rent Liabilities
• Tax debts
• Credit debt
• Claims for damages
If spouses have, for example, drawn up a joint will, such as a “Berlin will,” the surviving spouse often becomes the sole heir—and thus also responsible for any debts. Without a will, the statutory order of inheritance applies, under which spouses and children inherit jointly and are therefore jointly liable for debts.
Options for heirs
Accepting an inheritance
If you accept the inheritance, you are liable for the debts with your entire personal assets. If there are multiple heirs, the heirs are jointly liable.
Reject inheritance
You can disclaim an inheritance if the estate is over-indebted. However, this applies to the entire estate, including sentimental value such as keepsakes. A disclaimer is only possible within six weeks of learning of the death. ” After this period, a disclaimer is no longer possible, especially if your actions constitute acceptance of the inheritance, for example, by accessing bank accounts, ” explains lawyer István Cocron.
Estate administration and estate insolvency
If the deadline for disclaiming an inheritance is insufficient to examine the estate, you can apply for estate administration. An estate administrator will then determine the extent of the assets and liabilities and ensure that debts are settled only from the estate. If debts remain, the heirs are no longer liable. Should the estate be insufficient to cover the debts, estate insolvency proceedings can be initiated, which are limited to the estate itself.
Planning for inherited debt
To protect heirs from unwanted debts, it is advisable to draw up a will in good time and clarify the order of inheritance. If there are high debts, an agreement to waive inheritance rights can be made with potential heirs.
“Heirs should know their rights and obligations and, if in doubt, seek legal advice in order to make the best decision for themselves, ” said lawyer Cocron.
