Offsetting a legacy against the compulsory share – the reduction under Section 2318 BGB
If you want to offset a legacy against the compulsory share, you will quickly come up against a central question: who bears the burden of the compulsory share – the heir alone, or can legacies be reduced proportionately? Where a testator benefits people through legacies and at the same time disinherits persons entitled to a compulsory share, Section 2318 of the German Civil Code (BGB) provides the answer. This article explains the right of reduction and Martin’s formula (Martin’sche Formel) using four practical examples.
The legacy (Vermächtnis) – the gift of a specific item or value from the estate to a person without appointing that person as heir – is a tried and tested tool in estate planning. It becomes problematic as soon as statutory compulsory share (Pflichtteil) claims also exist because one or more descendants have been disinherited.
In such cases, the German Civil Code provides in Section 2318(1) BGB for a so-called right of reduction (Kürzungsrecht): the burdened heir can demand that legatees also bear a proportionate share of the compulsory share burden – the legacy is therefore offset proportionately against the compulsory share. How this contribution is calculated and which special features apply in different constellations is shown by the following four practical examples.
The right of reduction under Section 2318 BGB
In principle, the compulsory share claim is directed against the heir – he or she is the one who has to pay out the compulsory share in cash. Since legacies reduce the estate without the legatees contributing to the liabilities of the estate, it would be unfair to let the heir bear the burden alone. The right of reduction under Section 2318 BGB creates a proportionate balance here by offsetting the legacy proportionately against the compulsory share.
Martin’s formula
The reduction is calculated using what is known as Martin’s formula:
Martin’s formula:
Reduction amount = (value of legacy ÷ value of estate) × amount of compulsory share
Martin’s formula ensures that each legacy only contributes to the compulsory share burden in proportion to its value relative to the total estate – no legatee is burdened disproportionately.
Martin’s formula ensures that each legacy only contributes to the compulsory share burden in proportion to its value relative to the total estate – no legatee is burdened disproportionately.
Case 1 – Partner as sole heir, one disinherited child
Facts
The testator is divorced. He leaves behind his son Klaus, who is completely disinherited, and his partner Luise, whom he appoints as sole heir. He leaves €125,000 to his friend Friedrich as a legacy. The total estate amounts to €400,000.
Solution
As the only child, Klaus is entitled to a compulsory share of €200,000. Luise is initially solely liable, but can demand under Section 2318(1) BGB that Friedrich’s legacy bears a proportionate share. Applying Martin’s formula:
€125,000 ÷ €400,000 × €200,000 = €62,500
The legacy is reduced by 50% (= compulsory share ratio).
Result: Luise → €137,500 | Friedrich → €62,500 | Klaus (compulsory share) → €200,000
Practical tip: If the legacy is a tangible asset (e.g. a property), Friedrich can avert the reduction by making a cash payment to Luise – this way the asset remains undivided.
Case 2 – Two children, a legacy for each – only one is disinherited
Facts
The testator is widowed and has two children: son Simon (disinherited) and daughter Tina. His partner Luise is appointed sole heir. Tina receives a legacy of €125,000, and his friend Friedrich also receives €125,000. Estate: €500,000.
Solution
Simon’s compulsory share amounts to €125,000 (¼ × €500,000). Tina’s legacy corresponds exactly to this ratio and is not reduced. Friedrich, on the other hand, initially bears 25% of his legacy, plus the shortfall from Tina:
Step 1: €125,000 ÷ €500,000 × €125,000 = €31,250.00 Step 2 (Tina shortfall): 25% × €31,250 = €7,812.50 ──────────────────────────────────────────────────────────────────────── Total reduction Friedrich: €39,062.50
Result: Tina → €125,000 | Friedrich → €85,937.50 | Simon (compulsory share) → €85,937.50 | Luise → €203,125
Case 3 – Son as heir, daughter disinherited – legacy exceeds net share
Facts
The testator is widowed and has two children: son Simon (sole heir) and daughter Tina (disinherited). His partner Luise receives a legacy of €350,000. Estate: €400,000.
Solution
Tina’s compulsory share amounts to €100,000. After paying out the legacy, Simon would be left with only €50,000. Simon can reduce the legacy by the full amount of the compulsory share:
Legacy (unreduced): €350,000 – Reduction (Tina's share): €100,000 ────────────────────────────────────────── Legacy (after reduction): €250,000
Result: Simon → €50,000 | Tina (compulsory share) → €100,000 | Luise → €250,000
Practical tip: Once the inheritance has been accepted, all testamentary obligations must be fulfilled. Simon could only have claimed his own compulsory share by disclaiming the inheritance.
Case 4 – Disclaimer: substitute heirs are liable for the compulsory share and the legacy
Facts
Variation of case 3: Simon disclaims the inheritance. The testator has appointed his parents as substitute heirs. Daughter Tina is still disinherited, and Luise receives the legacy of €350,000. Estate: €400,000.
Solution
The parents step in as substitute heirs, but have no compulsory share entitlement of their own, as the testator has children. They must use the entire estate to satisfy all claims:
Estate: €400,000 – Compulsory share Tina: €100,000 – Compulsory share Simon: €100,000 – Legacy Luise: €200,000 ────────────────────────────────── Remaining (parents): €0
Result: Tina → €100,000 | Simon → €100,000 | Luise → €200,000 | Parents → €0
Summary: the key principles
Right of reduction proportional to the value of the estate: legacies are not offset against the compulsory share equally, but in proportion to their value relative to the total estate. Martin’s formula ensures that no legatee is burdened disproportionately.
Accepting the inheritance is binding: anyone who accepts the inheritance is bound by all testamentary obligations – including legacies. The appointed heir’s own compulsory share claim lapses upon acceptance.
Substitute heirs without a compulsory share entitlement: parents and grandparents as substitute heirs have no compulsory share entitlement of their own if the testator has descendants.
Legacies of specific assets can be preserved: if the legacy is a tangible asset, the legatee can avert the reduction by paying cash – an often overlooked scope for planning.
Frequently asked questions about offsetting legacies against the compulsory share
Yes. Under Section 2318 BGB, the heir burdened with the compulsory share can demand that legatees bear a proportionate share of the compulsory share burden. The legacy is reduced accordingly.
Using Martin’s formula: reduction amount = (value of legacy ÷ value of estate) × amount of compulsory share. This way, each legacy only bears its proportionate share.
Initially the heir. Through the right of reduction under Section 2318 BGB, however, legatees can be called upon to contribute proportionately.
With a legacy of a specific asset (e.g. a property), yes – by making a compensatory cash payment to the heir. This way the asset remains undivided.
No. Parents or grandparents as substitute heirs have no compulsory share entitlement of their own as long as the testator has descendants.
