The equalization of gifts and special services among heirs
When an estate is divided among children and other legal descendants, gifts or support payments that a testator made to individual children or grandchildren during their lifetime often need to be taken into account. Furthermore, obligations to provide compensation can arise if a descendant has made a particularly significant contribution through personal services, care, or labor. These obligations are governed by the legal provisions of the German Civil Code (BGB) and ensure a fair distribution among the heirs.
1. When must compensation be paid?
Under German inheritance law, the estate is generally divided equally among the legal heirs, usually the children. Even if the order of inheritance has been determined by a will, descendants are often given equal consideration, so that siblings form a community of heirs. In this context, the question arises whether gifts, so-called “advance inheritances,” or services rendered are to be offset against each other.
However, such a claim can only be asserted upon the occurrence of the inheritance. Two cases require such compensation:
1. When children or grandchildren are considered as legal heirs
2. If descendants are provided for as legal heirs or in the same proportion by virtue of a will or inheritance contract.
The legislator assumes that if children are given equal consideration in a will, the testator intended a fair distribution, which also means compensating for certain advance payments or gifts. In communities of heirs where siblings inherit equal shares, it is therefore examined how advance payments or gifts should be factored into the distribution. ” However, in the case of a so-called Berlin Testament between spouses, the predeceased spouse is also considered a testator, so their gifts must also be taken into account in the second inheritance, ” explains attorney István Cocron of the Cocron law firm.
2. Which grants and benefits must be offset?
The law stipulates that in the event of inheritance, certain circumstances must be balanced, falling into two categories. Firstly, it includes gifts that the deceased made to his children during his lifetime, and secondly, uncompensated services rendered by the children to the benefit of the deceased.
a. Gifts made by the deceased during his lifetime
Claims for compensation can arise if a child received certain benefits during the testator’s lifetime, such as:
– A dowry as defined in § 1624 of the German Civil Code (BGB). This includes financial gifts that parents give their children, for example, for marriage or to establish their own household. This could include financial support, the gift of a house, or a share in the family business.
– Grants or expenses for education or career, provided they exceeded the financial means of the deceased.
– A special bequest in which the testator has stipulated that other children may demand corresponding compensation in the event of inheritance.
b. Special achievements of a descendant
Children may also receive compensation if they provided long-term support to the deceased through gratuitous services, thereby contributing to the preservation or increase of their assets. Such services may include:
– Long-term, unpaid service in the household, profession or business of the deceased.
– Providing care over a longer period of time without an agreed-upon fee.
3. How can the testator avoid an obligation to make equalization payments?
The testator has the option of excluding the equalization of lifetime gifts after their death. They can do this by explicitly stating this at the time of the gift. Such an instruction takes precedence, as the obligation to equalize arises solely from the testator’s presumed intent. The testator can waive the equalization entirely, partially, or under specific conditions. ” While a written form is not strictly required—even an oral instruction would be legally valid—it is advisable to record the instruction in writing for evidentiary purposes. Furthermore, inheriting children can contractually stipulate changes, exclusions, or provisions, as equalization obligations are not legally mandated, ” explains attorney István Cocron.
4. How is the compensation between the heirs handled?
The equalization claim cannot be enforced through legal action but is part of the distribution of the inheritance within the community of heirs. It affects the division of the estate, but not the certificate of inheritance. The child who received a gift is taken into account through a corresponding deduction from their share of the inheritance, thereby increasing the share of the other heirs. However, this does not change the heirs’ status or the inheritance relationship itself. The gifts to be equalized are not part of the estate and do not have to be returned; it is merely a calculation that can also be adjusted for inflation.
5. What information obligations exist?
Often, not all heirs are aware of previous gifts to others. Heirs demanding that these gifts be taken into account must prove that they were subject to equalization. Conversely, anyone who has received such a gift must prove that the deceased explicitly excluded equalization. Inheritance law therefore provides for rights to information, according to which each co-heir must, upon request from the other heirs, provide information about gifts received, if necessary by means of a sworn statement.
In the event of conflicts, a co-heir can file a multi-stage lawsuit seeking information and a determination of the obligation to provide compensation. However, lawsuits demanding payment of compensation are not permitted.
“ If the obligation to compensate for inheritances was overlooked during the distribution of the estate and the estate has already been distributed, claims for unjust enrichment may be made under certain circumstances ,” said lawyer Cocron.
