Forced Share under German Law

Forced Share under German Law

The principle of testamentary freedom allows the testator to appoint heirs and to assign shares in the estate as he sees fit. However, as an exception to this rule, some privileged individuals may claim a forced share (“Pflichtteil”). The article outlines how how the German forced share is calculated and enforced.

Nature of the German Forced Share

Under German law, the person entitled to the forced share (hereinafter "forced heir”) does not automatically become owner of an estate’s assets upon death by operation of law. Further, the person entitled to a force share is not entitled to specific estate assets. Instead, the individual entitled to a force share may only claim a distribution of a certain amount. The German forced share is a monetary claim and is commonly referred to as a "compulsory portion".

Persons entitled to the Forced Share

Pursuant to § 2303 of the German Civil Code (BGB), the following individuals are entitled to receive the forced share:

  • Issue of the deceased (e.g. children, grand-children);
  • spouse; and/or
  • parents of the deceased, if the deceased was not survived by issue. 

Additionally, the registered same sex life partner is entitled to receive a forced share. § 10 (4) German Act governing the same sex registered partnerships (LPartG). The siblings of the deceased are not entitled to a forced share.

If the children survive the deceased, the issue of such children (i.e. grandchildren of the deceased) are excluded from receipt of a forced share. In other words, children who outlive their parent bar their issue from receiving the forced share from their grandparent`s estate.

Exclusion from Inheritance

The forced share heirs are only entitled to a share of the estate, if they are excluded from an inheritance by will.  Otherwise, they may only have the supplementary forced share claim (see below) or a claw back claim. If the testator named a forced heir to be his heir or co-heir, however, his share in the estate is:

  • burdened by the designation of a subsequent heir, the appointment of an executor, or a direction concerning the partitioning of the estate, or
  • where he has been charged with a legacy or a testamentary burden,

he/she may claim the forced share if he/she disclaims the inheritance (See § 2306 BGB).

Liability for Forced Share

The "heir" in the meaning of § 1922 BGB is liable for payment of the forced share (See § 2303 (1) l BGB). If there is more than one heir (community of co-heirs), each co-heir is liable for the forced share (See § 2058 ff BGB).

Calculation of the Forced Share

The forced share amounts to half of the value of the share the disinherited individual would have received, if the deceased had made no will (intestate share). See § 2303 (1) 2 BGB.

Example: A deceased widow leaves two children, A and B. Under German intestacy rules, the intestate share of each child amounts to 50%. Thus, the forced share of each child amounts to 25 % (= one half of the intestate share).

In determining the forced share, the shares of disinherited individuals, individuals who have disclaimed the inheritance (after the death of the deceased) and/or those who are unworthy of inheriting are included. See § 2310 1 BGB.

Example: In the above example A is unworthy to inherit. Accordingly, he receives neither an intestate share nor a forced share. One may assume that the forced share of B would be 100% as he would be sole heir under intestacy rules. However, according to § 2310 1 BGB his share remains 50%.

However, the share of a person who has contractually waived his or her inheritance rights is not to be included (See § 2310 2 BGB). 

The value of the inheritance at the time of death is crucial (See § 2311 BGB). 

If the testator made a gift to the person entitled to the forced share during his lifetime or upon his death outside of the estate (e.g. insurance payment or POD account), the forced share will be decreased by the amount of the gifts. However, for the gift to be deducted it is crucial that the gift is declared to be deducted from the forced share. Failure to declare that the gift shall deducted will result in no deduction and the forced share will be calculated accordingly. See § 2315 BGB. Thus, if the testator does not declare that the gift shall be deducted from the forced share or does not do so at the time of the gift, the forced heir can still claim the full forced share.

Example: M gifts to her children A and B two valuable properties during her lifetime. As she trusts her beloved children, she assumes that they will receive the remainder later anyway and does not declare that the gift shall be deducted from the forced share. However, A and B turn out to be ungrateful and do not care for her mother when she gets ill. Thus, M decides to give everything to the church and states in her will that her children “have already received their forced share.” As M hasn’t expressed the intention that the gift shall be deducted from the forced share when she made the gift, A and B can claim the full forced share.

Supplementary Claim

If the person entitled to a forced share is not completely disinherited, but instead is bequeathed a share less than the forced share, he shall have a supplementary claim (Zusatzpflichtteil). § 2305 BGB. The supplementary amount equals the difference between the amount provided in the will and what the forced share would have been.

Rights of the Legatee

If a legatee (beneficiary of a specific bequest) would receive more under the forced share regime provided for in § 2303 BGB, he may disclaim the amount bequeathed and claim the full forced share (See § 2307 (1) 1 BGB). If he does not disclaim the gift, the amount bequeathed is deducted from his forced share (See § 2307 (1) 2 BGB).

Rights of the Spouse

if the spouse was excluded from inheritance and the spouses were married under the statutory matrimonial property regime of Community of accrued gains (Zugewinngemeinschaft), he/she is entitled to 1/8 of the estate and equalization of the surplus. If the spouse was not completely excluded, he/she is entitled to 1/4 of the value of the estate (See §§1931 (1), 1371 (1) BGB). Alternatively, the spouse may disclaim the inheritance and claim 1/8 and equalization of the surplus.

If the surplus of the surviving spouse is significant, it can be advisable for the spouse to disclaim the inheritance and claim equalization of the surplus.

Clawback

In order to prevent the deceased from undermining the forced share, donation within the last ten years prior to the death of the deceased and payments on death outside of the estate (e.g. from a payable upon death account (Vertrag zu Gunsten Dritter)) are added (symbolically) to the estate as of the time of death and the forced heir has a claim  to additional payments under § 2325 BGB (Claw Back). However, only gifts in the 10 years preceding death are relevant. Additionally, the value of the donation is reduced by 1/10 of the value of the donation for year between the donation and the death. § 2325 Subsection 3 BGB.

Example: The deceased, D, makes a donation of € 100,000 in cash to his friend, F, on January 1, 2004. If D dies on January 2, 2012 and is survived by his disinherited son, S. The son can claim additional payments under § 2325 BGB. However, only 2/10 of the value of the donation is added to the estate of D.

If the donee is the spouse of the deceased, the 10 year period only starts after the marriage has ceased (See § 2325 (3) 3 BGB). Thus, the 10-year proportional deduction does not apply to the spouse unless they were divorced.

Furthermore, the 10-year period fails to commence, if the donor retained an interest in the gift. The determination as to whether the donor retained an interest is based on whether, from an “economic” perspective, the donor remains the owner of the gift. For example, a donor who retains a life estate or usufruct in a gift is considered the owner of the gift for the purposes of the 10-year statute of limitations.  (German Civil High Court, 94, 1791). Thus, if a testator creates a grantor trust, the 10-year period is not triggered.

IMPORTANT CONSIDERATION: The 10-year period fails to commence, if the donor retained an interest in the gift.

Generally, the heir is liable for an additional claim under § 2325 BGB. If the heir himself is entitled to the forced share, he can refuse an additional payment, insofar as this payment would affect his own forced share (See § 2328 BGB). In this case, the recipient of the gift is liable in so far as the heir is not obliged to an additional payment (See § 2329 BGB). The sole heir can also claim an additional payment to his inheritance. (See § 2329 (1) 2 BGB). All lifetime payments are deducted from the claw back claim (See § 2327 (1) BGB).

Waiver of Forced Share and Claw Back

Persons entitled to the forced share and the claw back claim may waive their rights during the life of the donor by notarized contractual agreement. If all inheritance rights are waived through an inheritance contract, these individuals will not to be included when calculating the forced share resulting in the remaining forced heirs receiving additional assets (See § 2310 2 BGB). Thus, it can be advisable not to disclaim all inheritance rights, but instead only disclaim the right to claim the forced share / claw back claim.

Loss of the Right to Inherit

Those who are unworthy of inheriting or who have waived their right to inherit have no right to the forced share (See §§ 2345 (2), 2346 I 2 BGB). A person can be deemed unworthy to inherit if he has concealed, altered or destroyed in bad faith the will of the deceased or because such person has hindered the testator in the writing, amendment or revocation of his will. The waiver of the right to inherit can be confined to the forced share (See § 2346 (2) BGB).

Right to Deprive the Forced Share

Pursuant to § 2333 BGB, the testator may deprive a descendent from the forced share if the descendant:

  1. Makes an attempt on the life of the testator, of the spouse of the testator, or of another descendant or of a person similarly close to the testator,
  2. Is guilty of a major offence or of a serious intentional minor offence against one of the persons designated in no. 1;
  3. Willfully violates statutory maintenance obligations to the testator; or
  4. Is finally sentenced to at least one year’s imprisonment without probation because of an intentional criminal offence and participation of the descendant in the estate is hence unreasonable for the testator. The same applies if the accommodation of the descendant in a psychiatric hospital or in a withdrawal clinic is finally ordered because of a similarly serious intentional offence.

Under the same conditions, the testator may deprive his parents or his/her spouse from the forced share.

Limitation of the Forced Share

If issue of the testator is wasteful or heavily indebted, the testator may limit the forced share by appointing his issue fiduciary heir for his offspring (Vorerbe) or by directing a Testamentsvollstrecker (estate trustee). In this case, the forced heir does not have full control over his part of the estate.

Statute of Limitations

The claim for the forced share becomes time barred three years following the discovery of the disposition, which infringes their rights by those entitled to inherit and after 30 years at the latest. §2332 BGB.

Enforcement of the Forced Share

A forced heir can demand from the heir or heirs an inventory and appraisal of the Estate so that he/she can accurately determine his/her share. See § 2314 I 1 BGB. If it is objectively reasonable to deem that the information provided is flawed, the forced heir can request that such an heir affirms that the inventory is accurate.

Generally, the forced heir cannot claim information from third parties (e.g. banks). However, information can often be obtained from German land registries or company registers.

Based on the available information, the forced heir should calculate his forced share (which is a monetary amount, see "Nature of Forced Share") and claim payment from the testamentary heirs. Generally, the forced share is payable upon the death of the testator. (See § 2317 I BGB). However, if the immediate payment of the forced share would unfairly affect the heirs (e.g. because they must sell the family home), the heir can ask the court to order that payment is made in installments or is postponed.

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