Upon the death of the testator, all of their assets and liabilities pass to the heirs. This process is legally known as universal succession. The heirs thus assume the legal position of the deceased and are also liable for their debts. They are jointly and severally liable, meaning that a creditor can demand payment of the entire debt from any single co-heir. ” The co-heir in question then has a right of recourse against the other co-heirs within the community of heirs, ” explains lawyer István Cocron.
Although heirs inherit the debts of the deceased, inheritance law provides various ways to limit this liability, both immediately after the death and in the long term. This is particularly important when the estate is heavily encumbered or even over-indebted, as unlimited liability for the heirs in such cases can lead to unfair results.
After a death, two separate assets are initially created: the heir’s personal assets and the estate, which is treated as a separate fund. The principle of limited liability for the estate allows the heir to restrict their liability to the estate’s assets. This gives the heir sufficient time to examine the estate and, in particular, to determine whether it is over-indebted.
For a transitional period, the heir is protected by certain defenses that grant them a temporary right to refuse performance. As a further step, they can bring about a permanent separation of their personal assets and the estate’s assets, for example, by appointing an estate administrator or initiating estate insolvency proceedings. Furthermore, the heirs can initiate a public notice procedure, in which creditors are requested to register their claims within a specific timeframe. If the creditors miss this deadline, the heirs’ liability is also limited to the estate’s assets.
At the same time, creditors have the opportunity to ascertain the extent of the estate. This is done by compiling an inventory, which the probate court can request the heir to provide. “ If the heir fails to comply with this request or provides incomplete or false information, they lose the right to limit their liability to the estate, ” says attorney Cocron.
