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Case study: Anglo German Inheritance dispute post Brexit
Background: My client repatriated her English father from Germany to England shortly after his German wife had passed away. At the time of his repatriation, he and his late wife had a German handwritten Will which left the entirety of their estate to the surviving spouse. In the event of both deaths, my client’s stepsister was to be the appointed Executor and the remaining estate was to be divided in half between my client and her step-sister.
On returning to England, my client’s father made a new Will under English Law and left his estate to his daughter. In making a new Will, he deliberately left out his estranged step-daughter as she had stolen valuable personal effects belonging to him whilst he had been in a German care home. The theft had been reported to the German Police.
Unfortunately, the untimely death of my client’s father, had not allowed the German Probate Court sufficient time to grant the “Erbschein” (Certificate of Inheritance), allowing his late wife’s estate to pass solely to him.
At this juncture, his step-daughter made an application to the German Probate Court to be appointed as the Executor of the German handwritten Will and to contest the Erbschein from her late mother’s estate to pass to her step-father. She also contested the validity of her step-father’s English Will on the grounds of advanced dementia.
My client instructed me to counter the appointment of her step-sister as the Executor of the German handwritten Will and to uphold the validity of her late father’s English Will in the eyes of the German Probate Court. The instruction was to also ensure the Erbschein was granted correctly to her late father’s estate in accordance with the German handwritten Will and to resolve all outstanding issues of probate relating to the estate in Germany.
Key Points of Defence:
- The claimant alleged that my client’s father was "unable to regulate his affairs because of his advanced dementia and alcohol addiction" and has "been standing for a long time under care". This argument was challenged on the basis that the German authorities would not have allowed my client’s father to be repatriated to the UK had he suffered from advanced dementia.
- The German handwritten Will stated "unlimited sole heirs". In other words, there was no restriction on the surviving spouse with making a future Will and my client’s father was at liberty to make a new Will.
- According to EU-ErbVO Art. 4; there is a lack of jurisdiction of the German Probate Court to uphold the handwritten German Will in favour of the English Will which was deemed valid.
- EU Inheritance Regulation (EU-ErbVO Art. 21 Para. 1, 20 in conjunction EGBGB Art. 25) aims to ensure that the relevant Probate Court and applicable law are in the same country; thus, the last habitual residence for my client’s father was in the UK. This ruling presides even though the UK is post Brexit and is no longer a member state of the EU.
By making these points of challenge to the German Probate Court, my client’s case was successfully resolved. The German Probate Court ruled in my client’s favour with granting the Erbschein (Certificate of Inheritance) to her late father’s estate. This was a satisfactory conclusion as there was a high risk that continued legal costs would completely erode the estate value.
Times of bereavement are difficult and can be made much worse and more stressful under circumstances of litigation in a different language and country. I am a qualified and experienced German Inheritance lawyer and am fluent in speaking English to help guide and support you sympathetically through complex German Inheritance Law and probate issues.
If you would like to know more about how I can help you, please contact me for an informal and friendly chat.
Phone: +49 711 2306800 click for email
A Client's Testimonial
Recently we have closed a German-American inheritance case. Here is the client's testimonial that we have received after sending our lawyer fee bill in the amount of about $25,000:
> I know this will sound ignorant but your billing cannot be for ALL the services you have performed? I think you are owed more money. Please be assured that we are greatly pleased with your efforts on our behalf. <
We are thankful for having had the pleasure to assist this client, who had retained our services for two reasons: (A) There was a fight with relatives about the shape of the grave marker, which was defined in the testator's last will, and the relatives were opposing the remodeling of the headstone in the shape of an open book. (B) When we have found out that to co-heirs were hiding some assets that belonged to the estate, we helped to have an auction and sold the testator's small farm in Germany for a much higher price than >fair market value< which the land appraiser had estimated.
Some years ago, I gave a presentation on estate planing for expats who live in Germany. One of the US citizens in the audience remarked that Germany was ’no good place to die’ (for him it seems to be a better place to life, which is great!). There are some important points to make about property succession in Germany:
What happens when an American citizen moves to Germany and the country becomes his domicile of residence? In a recent case, an American who had been living in Germany died intestate. He left behind a spouse and a child who are both German citizens and live only in Germany. How would his assets located in the US and in Germany be liquidated? What law would govern the administration of his estate?
The European Union’s Succession Regulation dictated that German law would apply in this case because it was the state of domicile of the deceased, and except for real estate assets, the US recognized this law. Dying intestate can turn out to be problematic when it comes to administrating the estate, considering cross-border laws and regulations. In the US, it can be less complicated because when there is no will, a public administrator is generally appointed; This is however not the case in Germany. The heirs named by the probate court have the responsibility to do so.
Another big surprise to Americans will be the ’Pflichtteil‘ claims: There is a rather unique entitlement for close family members such as descendants (children) and widow of the decedent, which gives them a claim for a legal mandatory portion of the value of the estate. This portion is half of the share such person would have inherited if the testator had died intestate. The heir can easily get into trouble since German inheritance law rules that the entitled person has a claim for money which is due immediately when ’Pflichtteil’ is demanded. If there is no money in the estate but real property, a family business, valuable art, or other illiquid assets, this might lead to seizure or even public auction of assets, and it is not automatically limited to assets belonging to the estate but may include the heir’s own property. Another issue may arise from the heir’s burden to give the person entitled to ’Pflichtteil’ all information on the estate, on possible gifts (including transfers for a consideration below market value) given by the deceased during his/her last 10 years before death, appraisals for assets other than cash, etc.
What is the test for a ’Pflichtteil’ claim? There are different possibilities that lead to the skipped descendants’ and spouse’s entitlement:
(A) If a person who is entitled to the compulsory share of the estate is disinherited in full by a last will and testament or a codicil, the heir can be faced with claims for ’Pflichtteil’.
(B) If such person is willed a share of the estate or if assets are bequeathed as a legacy to such person, but the share or value of assets is less than foreseen by German law, such person may claim the amount by which his or her share is less.
(C) The worst case scenario might be that a person entitled to a compulsory share is left a share that is bigger than ’Pflichtteil’, but either
- limitations such as designation of a subsequent heir, appointment of an executor or a direction regarding the partitioning of the estate or
- charges such as a legacy to someone else or a testamentary burden (e.g. care of the grave in a way ordered by the testator)
are willed. In these cases a person entitled to ’Pflichtteil’ may disclaim his/her rights and claims as a (co-)heir and claim ’Pflichtteil’ payment from the remaining heir(s) instead.
To avoid unpleasant surprises, it is highly recommended to contact a certified inheritance lawyer for assisting you with your estate planing, drafting of your last will and other clear-sighted planing.
(Stefan Mannheim, Certified Inheritance Lawyer in Stuttgart, Germany)
§ THE EU SUCCESSION REGULATION §
The new EU Succession Regulation No 650/2012 led to a major shift in German rules as they apply to conflicts of laws in transnational succession cases. This EU regulation applies to cases in which the person whose succession is concerned dies on or after August 7, 2015.
It stipulates that the law applicable to the succession as a whole is that of the habitual residence of the testator. The habitual residence must be determined on a case-by-case basis and is similar, although not identical, to the domicile as defined and understood in Anglo-American jurisdictions. The national inheritance law of that country is then applicable to the succession property as a whole, including real estate located abroad.
The EU regulation also gives testators the option to select the law of their country of nationality as governing. This can be done by including such a clause in a last will, given that this complies with the formal requirements for valid wills. The national law chosen by the testator will be applicable to the succession as a whole. Partition of an estate or succession property - that is to apply different national laws according to the different countries in which testator's assets may be located- is not allowed.
Please note that although this is an EU regulation, it was not adopted by all EU member countries and is therefore not universally applicable in the EU zone. Non-participating members include the United Kingdom of Great Britain, Northern Ireland, the Republic of Ireland and the Kingdom of Denmark.
Before the adoption of the new regulation on 08/16/2015, German inheritance law governed the succession of German citizens, regardless of their residence. Many other legal systems, like that of the English and almost all states in the US, require that the succession be ruled by the national law of the last domicile or residence of the deceased. Different laws from different countries were often applicable to one succession case. This was the case for example, when a U.S citizen was domiciled in Germany and had a weekend home in France. In those cases where the person whose succession is concerned died before 08/17/2015, the old law is still applicable.
German inheritance or gift taxes apply to virtually all inheritances and gifts that have a connection to Germany. For example, a gift is subject to German gift tax, if Germany is deemed to be the donor or recipient’s country of domicile for German tax law purposes. Also, German gift tax is imposed on real estate in Germany, no matter where the donor and recipient live.
HEIRS WHO LIVE ABROAD - THE CHALLENGES
There are many challenges to an inheritance case when the parties involved live abroad. One of the main hurdles to overcome in such cases is the language barrier: For example, an heir who grew up and lives in Canada but inherits from his German grandmother will not understand documents pertaining to his inheritance because they are written in German. He would have to retain services of a translator. More importantly, laws vary from one country to the other. Further challenges thus arise out of the many differences between our European legal system and the Anglo-American legal system. An heir who is used to the Anglo-American ‘ways of doing things’ will be completely lost when dealing with probate proceedings in a country like Germany.
One example of such differences is that there is generally no court-appointed administrator; the responsibility to manage the estate falls on the heir individually. Furthermore, succession is done by operation of law- this means, that no probate hearing is required for the heir to become owner of assets and debtor for liabilities of the deceased- it is done automatically.
It is therefore important and wise for foreigners dealing with an inheritance case in Germany to retain the services of a certified Inheritance lawyer (Fachanwalt für Erbrecht) who speaks English and who has handled such cases with a transnational element/component since this would very much facilitate the process.
The lawyer would take care of setting all necessary appointments and handling communication with German courts and other offices involved within the probate process. This includes but are not limited to notary publics, banks, real estate agents/ appraisers, tax consultants etc... The judge will most likely require heirs to produce documents such as those proving lineage, legitimacy, or identity before assets are distributed.
In such cases, it would make sense to have a lawyer who can coordinate with government offices locally in Germany and in the foreign land to gather information and obtain all necessary documents for the process to run as smoothly as possible. He would know for example, which foreign document would fit the category required by a local German office. Because the lawyer speaks both German & English, he can not only translate documents but also be present at his client’s appointments, thus avoiding additional costs and time required for translating and interpreting. This also puts the client at ease, who is better able to communicate his or her wishes to the attorney.
Anwaltskanzlei Stefan Mannheim
+49 (0)711 230 6800 *
*Please keep in mind that we are in Central European time. We are therefore 6 hours ahead of Eastern Standard time.
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