An inheritance can bring an increase in wealth, but it often also comes with obligations, such as assuming the deceased’s debts. It becomes particularly disadvantageous if the inheritance consists primarily of liabilities. By disclaiming the inheritance, you avoid this burden of debt, but you also forfeit positive assets, your statutory share, and personal mementos like photos or letters – it’s an “all or nothing” decision.
Before making a final decision, you can first get an overview of the deceased’s assets and debts. If you decide against the inheritance, the law will treat you as if you were deceased. In this case, the substitute heirs named in the will or the next legal heirs will take your place – often your children. If these heirs are minors, both parents must also actively disclaim the inheritance on their behalf. Within a community of heirs, each heir can decide individually. As a precaution, inform relatives if the estate is over-indebted.
Should all legal heirs reject the inheritance, it passes to the state, with the respective federal state taking over the assets and also the debts.
“If you are unsure whether you want to accept the inheritance, then mark all your actions as a ‘provisional heir’, e.g., when receiving rent payments for an apartment in the estate, in order to preserve your freedom of choice,” advises lawyer István Cocron.
When is it advisable to decline an inheritance?
Debt isn’t the only reason why disclaiming an inheritance might be advisable. In other special cases, it’s also wise to carefully consider whether you want to accept the inheritance.
Disclaimer of inheritance as a spouse
For spouses who lived in a community of accrued gains, special rules apply when it comes to disclaiming an inheritance. They have the option of rejecting the inheritance and still claiming their statutory share. If the deceased spouse accumulated substantial gains, it may be financially more advantageous for the surviving spouse to waive the inheritance and instead claim equalization of accrued gains as well as their statutory share of the remaining estate.
Saving taxes by disclaiming an inheritance
A testator without children bequeaths his assets to his brother, who is already elderly and has no financial need for the inheritance. To avoid double inheritance tax, the brother should disclaim the inheritance. This way, his children can inherit directly, and the tax is only levied once, whereas otherwise, it would be due twice: once upon his death and again when he dies and his children inherit.
Disclaimer of inheritance if the heir has debts
An heir to a fortune of €150,000 has substantial debts and several children. It might be more advantageous for him to disclaim the inheritance. If he were to accept it, the assets would primarily benefit his creditors, leaving his children with nothing. By disclaiming the inheritance, the estate passes directly to the children, and the heir’s debts do not affect the inheritance.
Compulsory share claim instead of inheritance
A testator names a child as his heir with a small inheritance share and additionally requires annual donations to a charity. If the child does not wish to comply with these conditions, he or she can disclaim the inheritance and assert their right to a compulsory share in order to receive the estate without additional stipulations.
How to decline an inheritance
- If you are a potential heir, get an overview of the deceased’s assets and liabilities as quickly as possible. Check important documents and clarify bank account balances.
- Do not apply for a certificate of inheritance initially, as this will automatically be interpreted as acceptance of the inheritance!
- You have six weeks to decide whether to accept or decline the inheritance after being notified of it. If the deceased resided abroad or if you are abroad when the deadline begins, the period is extended to six months. Please observe this deadline, otherwise you will automatically accept the inheritance, including all its obligations.
- If you wish to disclaim the inheritance, contact the probate court in your place of residence or the deceased’s last place of residence and submit your declaration there. You will need your identity card.
- Alternatively, you can submit a declaration to a notary public stating that you reject the inheritance. The notary will then forward this declaration, certified, to the probate court.
- The costs for disclaiming an inheritance depend on its value. In cases involving debt, the minimum fee at the probate court is 30 euros.
Inheritance abroad: Which law applies?
Disclaiming an inheritance becomes particularly complicated when the deceased and heirs reside in different countries – for example, if someone moved abroad for professional reasons or the deceased spent their retirement abroad. In such cases, heirs are still not always treated according to German inheritance law.
The European Succession Regulation, which has been in force in almost all EU countries except Denmark, Ireland, and the UK since August 2015, simplifies the handling of cross-border inheritance cases. In such cases, the inheritance law of the country where the deceased had their last habitual residence applies – a determination that is not always clear.
The decisive factor is the strength of the deceased’s connection to their last country of residence. The closer this connection, the more likely the inheritance law of that country will apply, which could mean that a German will is not recognized in another country. To avoid this risk, the testator can stipulate which inheritance law should apply during their lifetime through an inheritance contract or a will – provided they do not hold the citizenship of the country where they ultimately die.
For Germans who live in France, for example, and acquire French citizenship, there is no longer any possibility of applying German inheritance law. Consequently, their heirs cannot simply disclaim the inheritance under German law.
Despite the simplified regulations, cross-border inheritance cases still present challenges and risks. Therefore, timely information about applicable inheritance laws and possible precautionary measures is essential if heirs wish to reject the estate settlement.
Waiver of inheritance and funeral costs: Who bears the burden?
Generally, the heirs are responsible for funeral expenses. However, if all heirs have declined the inheritance, the surviving relatives legally obligated to provide support assume this responsibility. These are either the surviving spouse or – in the case of minors – the parents, or adult children in the case of funeral expenses for their parents. If sufficient funds are lacking, social assistance may cover the costs.
