The form of the US trust is unknown to German law. Against this background, questions of all kinds arise. How is a trust treated in German probate proceedings? How are the persons involved qualified? What steps must be taken to obtain the trust assets? These questions will be answered here.
What is a trust?
A trust is the spin-off of a Special assets, which is transferred to an administrator and is intended to benefit a beneficiary. It is a fiduciary legal relationship in which the trustee/administrator disposes of the assets. The trustee/administrator acts as an administrator vis-à-vis the outside world, but is bound internally by the rights and obligations granted to him by the trust's creator.
The Trust no charitable purposes be pursued. Rather, the trust can also serve private interests. The person who sets up the trust is called the „trustor“ or „settlor“. The administrator is the „trustee“ and the beneficiary is the „beneficiary“. A trust is not always set up in a three-person constellation; the trustee and the beneficiary can also be the same person.
Trusts come in many guises. For example, there are American and Anglo-Saxon trusts. This article deals with the American trust, focussing on the trust established by will („testamentary trust“).
How does a testamentary trust work?
A testamentary trust is established by will. This means that the usual instructions and requirements for the establishment of a trust are set out in the last will and testament. What requirements for the Effectiveness of a trust The requirements for establishing a trust are determined by the law of the respective US state. In general, a trust deed / declaration of trust is required for the establishment of a trust. In the case of a testamentary trust, the will and the deed of trust are combined so that they constitute one document. The testamentary trust must therefore be drawn up in writing by the trustor and notarised.
If a trust is set up, it becomes a separate asset and is not part of the trustee's personal assets. Therefore, creditors cannot enforce the trust if the trustee is a debtor. A trust can be used to secure assets for a beneficiary over a longer period of time. During this time, a testamentary trust may incur costs due to the supervision of a probate court.
The situation is different for a „living trust“. In this case, the trustor appoints himself as trustee during his lifetime. From a US perspective, this makes it a separate asset and not part of the estate. This has the advantage that the trust assets are not subject to the American probate procedure, but can be transferred to the beneficiaries named in the trust after the settlor's death.
How are a trust and the persons involved treated in Germany?
A trust is treated differently in Germany. In a decision, the Berlin Court of Appeal (decision of 3 April 2012 - 1 W 557/11) commented on the characterisation of a trust under German property law.
According to case law and the prevailing opinion in the literature no trust can exist for assets in Germany. In Germany, there can be no split ownership. However, this is precisely what would exist under the usual constellation of trusts. Accordingly, the trustee can dispose of the assets in his own person vis-à-vis others within the scope of his powers. However, the beneficiary is the person to whom the property is later to be granted. In this respect, in the opinion of the Berlin Court of Appeal, there is a „split legal personality“, which is prohibited.
So a Reinterpretation (Section 140 BGB). This law serves to „rescue“ void legal transactions. It looks at the intention of the person who carried out the legal transaction and asks what they really wanted. And if the real intention then corresponds to a different and possible legal transaction, this is applied to the present constellation.
The role of the Trustees and its representatives can take on the role of a Executor of the will be reinterpreted. In contrast, the Beneficiaries as a rule as Heirs as they are economically entitled to the assets.
However, this only applies as a rule. In some constellations it can Deviations for example, if the trustee is also one of the beneficiaries. Under certain circumstances, however, the structure of the trust can also be reinterpreted as a prior and subsequent inheritance if the beneficiary is later to be replaced by other beneficiaries.
How does the procedure work?
In Germany, in many cases a Certificate of inheritance may be necessary, for example if real estate in Germany was inherited by way of a testamentary trust. Banks in Germany will also not be able to easily check the order of succession and the entitlement to accounts and custody accounts in the case of a disposition by way of a US trust and will not allow a disposition due to the uncertainty regarding the legal situation if a bank power of attorney is not available at the same time.
Even if the deceased was an American citizen and last resided in the USA, a certificate of inheritance can be applied for in Germany. This results from Art. 64 in conjunction with Art. 10 of the EU Inheritance Regulation.
The certificate of inheritance is regulated in §§ 2353 ff. BGB (German Civil Code). If only part of the assets are located in Germany, a limited certificate of inheritance (Section 352c (1) FamFG) can be applied for. This then only applies to these assets.
The Application for a certificate of inheritance does not have to be carried out by the heir himself. He or she can be represented, for example by a lawyer. The competent court is generally determined according to the deceased's last place of residence or last domicile. In the absence of both, any court in whose district the estate is located has local jurisdiction, Section 343 (3) FamFG.
Pursuant to Section 352 (3) sentence 3 FamFG, the court may issue a judgement on certain information in the application. affidavitinsurance request. The heir must do this themselves; representation is not permitted. However, as the affidavit must always be submitted before a German court or notary, the question arises as to whether foreign German authorities can also accept these affidavits.
In the proceedings cited above, the Berlin Court of Appeal commented precisely on this.
„Proof:
In fact, [...] the obligation under Section 2376 (2) BGB to prove certain details by means of an affidavit proves to be a formal requirement, so that the application is usually made for the record of a notary or the court. The content of the application results from Sections 2354, 2355, 2357 BGB. In this context, pursuant to § 1 Para. 2 BeurkG in conjunction with § 10 Para. 1 No. 1 KonsG Consular officers authorised to notarise affidavits in accordance with § 10 Para. 2 KonsG (Strübing, ZErb 2008, 178, 187; cf. in summary Bindseil, DNotZ 1993, 5 ff ). In this respect, the Local Court did not raise any objections; on the contrary, it did not consider the copy of the will provided with an apostille to be sufficient.“
This means that Affirmations in lieu of oath also in front of a German consulate can be made abroad. Section 12 No. 2 Variant 1 KonsG clarifies that this also applies to declarations in lieu of an oath made in order to obtain a certificate of inheritance. There is an overview of German consulates in the USA here.
The problem is that, in principle, only consular officials can make this declaration if they are qualified to hold judicial office, Section 19 (1) KonsG. If they do not have this qualification, they must be specially authorised to do so by the Federal Foreign Office, Section 19 (2) sentence 1 no. 3 KonsG. It must therefore always be ensured that the other party is also authorised to carry out the activity.
In the previous proceedings, the Local Court found it difficult to confirm the authenticity of the documents submitted. Therefore, before the consular officer, the Documents be legalised. Legalisation is regulated in § 13 KonsG and, according to paragraph 2, has the effect of Confirmation of authenticity of the documents submitted.
The Costs for acceptance of an affidavit before a consular officer are calculated in accordance with § 25 KonsG in conjunction with § 1 AKostG, § 1 AKostV and Annex 1 to § 1 AKostV No. 160.2 and are determined according to the value of the estate.
The costs for the Legalisation of documents are calculated in accordance with § 25 KonsG in conjunction with § 1 AKostG, § 1 AKostV and Annex 1 to § 1 AKostV No. 230 ff. and can amount to between 25 euros and 85 euros.
Is a restriction of the heir noted in the certificate of inheritance due to the trust?
In many cases, the trustee can be regarded as the executor of the will. Such a restriction would have to be noted in the certificate of inheritance, Section 352b FamFG.
However, this applies notfor the cases, in which only one Supervising execution of the will (Section 2208 (2) BGB) was ordered. The OLG Cologne argued that the execution of the will only had to be noted in the certificate of inheritance if the heirs were to be restricted in their power of disposal over the estate by the execution of the will.
In the case in question, the testator had ordered the execution of the will. However, he restricted this himself. He stated that the executor's task should only be to monitor the testamentary disposition and not the ongoing administration of the estate.
The question of whether the trustee must be recorded as executor in the certificate of inheritance will therefore regularly depend on the specific structure of the trust. Did the testator intend to grant the trustee power of disposal or was he merely to supervise the settlement of the trust? In concrete terms, this can also be determined by the question of whether the trustee has discretionary powers, such as when to pay out the trust.
Can the trustee apply for an executor's certificate?
This question again depends on the specific role of the trustee. As described above, the trustee's activities will generally be comparable to those of an executor.
The basic requirement is that the trustee must have accepts office, Section 2202 para. 1 BGB. They must do this before the probate court in accordance with Section 2202 (2) sentence 1 BGB. Also a written declaration acceptance is permissible. If acceptance has been declared, the trustee can then apply for an executor's certificate.
From this point onwards, the information on applying for a certificate of inheritance applies accordingly, Section 354 (1) FamFG. This means,
- the competent court is the district in which the deceased had his last domicile or residence or in which the estate is located.
- If the court requires a affidavit, If you do not have a visa, you can also hand it in at a German consulate.
As the powers of an executor in Germany are usually far-reaching, the legal situation in Germany will often not correspond to the will of the trustor. Restrictions on authorisations of the executor/trustee must then be noted in the executor's certificate, Section 354 (2) Alternative 1 FamFG.
Summary
The assessment of a trust under German inheritance and property law is complex. Therefore, the key points are briefly outlined here.
Basically
- A trust is reinterpreted in Germany
- In many cases, the trustee is regarded as the executor of the will and the beneficiary as the heir.
- Deviations are possible!
Certificate of inheritance procedure
- The beneficiary can apply for a certificate of inheritance and be represented in the process
- A declaration in lieu of an oath can also be made before a German consulate abroad
- The consulate can legalise foreign documents
- Whether a trustee is to be included as an executor in the certificate of inheritance depends on whether he or she has power of disposal or only a supervisory role.
- Under certain circumstances, the trustee can apply for an executor's certificate