The fulfilment of compulsory portion claims can be a financial challenge for the heir or heirs, especially if the estate essentially consists of illiquid assets or assets that cannot be easily liquidated.
1 When is the compulsory portion claim to be fulfilled?
In principle, the right to a compulsory portion is due immediately after the death of the deceased (Section 2317 (1) BGB). The right to a compulsory portion can therefore be asserted by the beneficiaries immediately after the death of the testator. In practice, however, it is usually not possible for the beneficiary to quantify the compulsory portion claim immediately. The beneficiary of the compulsory portion is dependent on this and is also entitled to receive information about the estate first, namely by submitting an inventory of the estate. If the estate also includes real estate, it will often be necessary to have the value determined by an expert appraisal. It typically takes several months before an inventory of the estate is drawn up and the valuations are available. However, if the heirs do not comply with the requests of the person entitled to a compulsory portion and no efforts can be seen to provide the requested information, the persons entitled to a compulsory portion will often not hesitate to take legal action, as the claim is generally due immediately.
2. do the heirs have to fulfil the compulsory portion even if the community of heirs has not yet been divided?
If they have not yet divided the community of heirs and the inheritance has not yet been divided among themselves, their liability is governed by Section 2059 BGB. Accordingly, until the estate has been divided, heirs have the right to refuse to authorise an estate liability if they have to access their private assets to do so. This limitation of liability is particularly interesting if a claim for a compulsory portion is asserted against one or more heirs.
Until the estate is divided, the beneficiary of the compulsory portion can demand the full amount of the compulsory portion from each heir, irrespective of the fact that the claimed heir is only entitled to a fraction of the inheritance. However, the claimed heir can refuse payment by way of the limitation of liability under Section 2059 BGB if they have to access their private assets to do so.
After the community of heirs has split up and divided the inheritance among themselves, they are only liable for the amount of their share of the inheritance in accordance with Section 2060 BGB.
3. can the heirs demand a deferral of the compulsory portion?
In order to be able to request a deferral of the compulsory portion, the requirements of Section 2331a BGB must be met.
„The heir may demand deferral of the compulsory portion if the immediate fulfilment of the entire claim would be an undue hardship for the heir due to the nature of the estate, in particular if it would force him to give up the family home or to sell an asset that forms the economic basis of life for the heir and his family. The interests of the person entitled to a compulsory portion must be given due consideration.“
The deferral requires a double examination. Firstly, immediate fulfilment must be unreasonably harsh on the heir or heirs due to the nature of the estate. Once this has been established, the interests of the person entitled to a compulsory portion must be taken into account appropriately. The age of the person entitled to a compulsory portion, their position in life and their own assets can play a role in this. The amount of time that has passed since the inheritance until the decision on the deferral application and the delays caused by legal proceedings and the provision of information must also be taken into account.
Due to the necessary consideration of the interests of the beneficiary of the compulsory portion, it will also have to be examined whether a deferral should not only be granted against the provision of security, e.g. the granting of a land charge.
Typically, these are constellations in which the object of the estate in question is a family home or several objects of the estate belong to a business that forms the economic basis of existence for the heir or heirs.
It is not necessary for the property to be occupied by the heir or heirs at the time of inheritance. Undue hardship may also exist if the property in the estate is to form the basis of the heir(s)' livelihood in the future. Immediate fulfilment of the claim to a compulsory portion must specifically jeopardise this economic livelihood.
The conditions for deferral must be examined separately for each heir. As long as the estate has not yet been divided, the deferral granted to one heir also benefits the other heirs. The background to this is that in the case of an undivided estate, enforcement can only be directed at this estate and the individual heirs are not liable with their personal assets until the estate is divided.
In order to obtain a deferral, the heirs must first submit an application to the probate court.
Example:
The testator has appointed his second wife as his sole heir. The deceased's children from the first marriage demand that the widow fulfil the compulsory portion claims. The widow receives a small widow's pension. The estate includes a detached house in which the couple have lived for more than 20 years. The widow is waiting for a place in a retirement home and would then like to sell the property. The children entitled to a compulsory portion have a normal income. It is reasonable to expect the children entitled to a compulsory portion to wait a certain amount of time until the widow has found a place in a retirement home and the property has been sold after a proper marketing process. A land charge can be registered to secure the children's compulsory portion claims. If the property is sold, the buyer will pay the purchase price to the children up to the amount of the compulsory portion claims if the corresponding cancellation permits are available.
The probate court is responsible for deciding on the deferral application. However, the prerequisite is that the amount of the compulsory portion claim is undisputed. In practice, the amount of the compulsory portion claim is undisputed in very few cases in which an application for deferral is considered.
If litigation is pending regarding the claim to a compulsory portion, the trial court has exclusive jurisdiction to decide on the deferral.