When thinking of an inheritance, people often associate it with real estate, bank balances, or securities accounts. In fact, however, according to German law, an inheritance encompasses much more than just a deceased person's assets. With the inheritance case, fundamentally go all rights and obligations of the testator passes to the heir or heirs. This can also include substantial debts.

Especially in an international context, such as when German or foreign nationals own assets in Germany, it is important to know the specifics of German inheritance law. Many clients are surprised to find that German inheritance law differs significantly in this respect from that of other countries, particularly the USA.

German inheritance law is based on the principle of the so-called universal succession, which is governed by Section 1922 of the German Civil Code (BGB).

This means that upon a person's death, their entire estate automatically transfers to the heir or heirs. A separate transfer of individual assets is generally not required. Legally, the heir steps directly into the position of the deceased and becomes their universal successor.

Surprising to many heirs is that with the inheritance not only assets, but fundamentally all estate liabilities as well be taken over. The heir thus fully steps into the legal position of the testator.

Especially in German-American estate cases, this distinction is of significant practical importance.

While German law generally makes the heir personally the legal successor of the decedent, estate administration in the United States typically proceeds differently.

There, the estate is in most cases initially within the framework of a judicial probate proceeding through a so-called Personal Representative or Executor managed. The estate liabilities are initially settled from the existing estate assets. If these assets are not sufficient, creditors often only receive a proportional satisfaction. In most cases, the heirs do not have to use their own private assets to cover any remaining estate debts.

These differences regularly lead to misunderstandings in international inheritance cases. Clients who are familiar with the US system often assume that in Germany, too, only the estate itself is liable. However, this is fundamentally not the case.

If there are indications that the estate could be insolvent, it should be examined at an early stage whether renouncing the inheritance is advisable.

With an effective disclaimer, the inheritance is legally deemed not accepted. The person concerned then does not become an heir and consequently is not liable for the estate liabilities either.

However, the statutory deadlines must be strictly observed. As a rule, the period for disclaiming an inheritance is six weeks from the time the heir has knowledge of the inheritance and their status as an heir.

If the testator was last domiciled abroad, or if the heir is staying abroad at the start of the time limit, the time limit for disclaiming the inheritance is regularly extended to six months.

Since a disclaimer has far-reaching legal consequences and is no longer possible after the deadline has expired, a corresponding Never make a decision without careful examination to be hit.

Not every indebted estate necessarily has to be renounced.

There is often an interest in preserving valuable assets or companies without simultaneously being liable for all estate liabilities with one's own private assets.

German law provides various instruments for this purpose.

The heir can apply to the competent probate court for an order for the administration of the estate.

In this case, a court-appointed estate administrator takes over the administration and winding up of the estate. The goal is to fundamentally limit the heir's liability to the estate and to satisfy creditors from the available estate assets.

However, estate administration requires that certain statutory conditions are met and that the heir has not yet established their unlimited liability.

If it is determined or becomes apparent during the administration that the estate is over-indebted or insolvent, an estate insolvency proceeding can or, under certain circumstances, must be applied for.

The heir is obliged to submit a corresponding application without undue delay as soon as they become aware of the over-indebtedness or inability to pay. If they culpably fail to do so, they may be liable for damages to the estate creditors.

Therefore, especially in international estates, it should be examined as early as possible which measures are necessary to protect private assets.

Although universal succession is the standard rule, German law provides for various exceptions. In certain areas, the heir does not step directly into all the legal positions of the deceased. Of particular practical importance are, among others:

Especially in the case of cross-border estates with assets in Germany and abroad, it should be examined at an early stage which inheritance law applies and what liability consequences result from this.

The differences between German and US inheritance law can have significant financial consequences. Careful estate planning often helps to limit liability risks, simplify probate, and structure wealth succession in a legally secure manner.

Urban Thier & Federer has been advising clients for many years on international inheritance matters with connections to Germany and the United States. We assist testators and heirs with both estate planning and the administration of complex cross-border probate proceedings, developing solutions that take into account the respective legal and tax frameworks.

This article is for general informational purposes only and does not replace individual legal advice. The legal assessment of an inheritance always depends on the specific circumstances of the individual case and, particularly in the case of international estates, on the applicable legal system. Therefore, before making important decisions, especially regarding the acceptance or disclaimer of an inheritance, legal counsel should always be sought.