Entitlement of the beneficiary of the compulsory portion to have the value oft he estate’s assets determined
In order for the beneficiary of the compulsory portion to be able to calculate the amount of his or her claim to the compulsory portion, the beneficiary of the compulsory portion first has a claim against the heir to the presentation of a list of the estate. In such a list, the individual items belonging to the estate and their value-forming factors are to be listed. If the estate includes a car, for example, it is not sufficient to state "Mercedes car". Rather, further information must be provided on the type, year of manufacture, mileage, equipment, etc., because these factors are value-forming and a value cannot be determined without this information. However, it is often the case that the beneficiary of the compulsory portion is unable to determine the value even if more detailed information on the item is provided in the inventory, for example because he lacks the expertise to do so. This is particularly likely in the case of real estate and jewelry. For this reason, the beneficiary of the compulsory portion may, in addition to the list, also request that the value of the objects of the estate be determined (§ 2314.1 sentence 2 half-sentence 2 BGB).
Is the value of the estate's assets determined in a binding manner by an expert opinion?
The claim to valuation is not intended to determine the value of the estate object at the time of the inheritance in a binding manner for the beneficiary of the compulsory portion and the heir. Rather, the claim to valuation is intended to make it easier for the beneficiary of the compulsory portion to assess the risk of a legal dispute regarding the compulsory portion (BGH, judgment of 29.09.2021 - IV ZR 328/20).
The calculation of the compulsory portion is to be based on the existence and value of the estate at the time of the inheritance. The beneficiary of the compulsory portion shall be placed in the same economic position as if the estate had been converted into money at the death of the testator. The valuation of estate items must therefore be based on the so-called fair market value, i.e. the value corresponding to the sale value at the time of the inheritance. Since valuations by an expert are also associated with uncertainties and actual sales values sometimes differ greatly from the values determined by experts, the question arises as to whether a valuation by an expert requested by the beneficiary of the compulsory portion himself is binding. According to case law, this is not the case. Even after submission of an expert opinion on the value of an estate item, the beneficiary of the compulsory portion may use a different value as a basis with regard to this estate item. This also applies if the expert opinion on value was prepared and submitted precisely at the request of the beneficiary of the compulsory portion. As already explained, the claim to valuation pursuant to § 2314.1 sentence 2 half sentence 2 of the Civil Code serves to provide the beneficiary of the compulsory portion with a better basis for assessing his or her claim. If the beneficiary of the compulsory portion then claims in the proceedings that the value of the relevant estate item is higher than that determined by the expert, the beneficiary of the compulsory portion bears the burden of proof and the risk of the proceedings in this respect. On the other hand, the heir can also claim a lower value of an estate item in a dispute about the amount of the claim to the compulsory portion than previously determined by the expert. In practice, however, it can be observed quite predominantly that both the beneficiary of the compulsory portion and the heir are guided by the expert opinion and only in rare cases are values claimed that deviate from this.
Which value is decisive if the real estate (or another object of the estate) is sold after a valuation report has been prepared?
If an expert opinion on the value of real estate belonging to the estate was prepared and the real estate was subsequently sold, the question arises as to whether the sales value or the value according to the expert opinion is to be used to calculate the amount of the claim to the compulsory portion. According to the case law of the Federal Court of Justice, the actual sales value is to be used - except in exceptional cases - if the property was sold soon after the inheritance. The sales price is therefore then generally given priority. If the property is sold to a third party, it may also be assumed in principle that the heir as the seller has endeavored to achieve the highest possible sales price and that the sales price corresponds to the so-called fair market value. In some cases, however, there may be indications that the sales price does not correspond to the fair market value, for example, if the property was sold to a close relative or partner of the heir or if there are other circumstances that give rise to doubts as to whether the price is the result of a negotiation that would otherwise be customary between unrelated third parties. However, the actual sale price is not binding for the beneficiary of the compulsory portion either. The beneficiary of the compulsory portion may also claim a different value of the property for the purpose of calculating the amount of his compulsory portion. However, the beneficiary of the compulsory portion then also bears the burden of proof for the assertion that the property has a higher fair market value than the actual sale price. Such proof can also be provided by obtaining an expert opinion during the proceedings.
Can the beneficiary of the compulsory portion also demand a valuation by an expert if the estate property has already been sold beforehand?
In the event that a property belonging to the estate was sold soon after the inheritance, case law usually bases the calculation of the compulsory portion on the actual sale price. However, this does not mean that the beneficiary of the compulsory portion is therefore not entitled to the submission of an expert opinion. Rather, the beneficiary of the compulsory portion can in principle demand that the value of the property at the time of the inheritance is determined by an expert. A value appraisal by an expert enables the beneficiary of the compulsory portion to estimate whether the sale price actually corresponds to the fair market value. Finally, the beneficiary of the compulsory portion can also claim a value other than the sale price and base his calculation on this. If the beneficiary of the compulsory portion had no claim against the heir for a valuation in the event of a sale, the beneficiary of the compulsory portion would bear the risk in the proceedings if he/she set a value that was too high without the corresponding expertise (cf. BGH, judgment dated 29.09.2021 - IV ZR 328/20). Nevertheless, practical problems may arise when enforcing the claim to valuation if the property has already been sold and is owned by a third party. The legally obligated heir cannot force an inspection of the property by an expert if the new owners object to an inspection by an expert. It is true that the expert can then, if necessary, make a valuation on the basis of the external appearance and the paper situation. However, the informative value is then naturally lower and there is a risk that the purpose of the claim is missed, namely to give the beneficiary of the compulsory portion a better decision-making basis for pursuing his claim.
Does the beneficiary of the compulsory portion have a claim that the valuation is made by a "publicly appointed and sworn expert"?
Particularly when it comes to determining the value of a property belonging to the estate, there is often concern that the heir could exert influence on the appraiser or that the appraiser does not exercise due care in determining the value for other reasons. In many cases, the beneficiary of the compulsory portion demands that the heir prepare a valuation report by a "publicly appointed and sworn expert". However, there is no such claim. The qualification of the expert is not regulated in § 2314.1 sentence 2 half-sentence 2 BGB. The only decisive factor is that the value of the object of the estate is determined by an impartial expert, irrespective of whether he is publicly appointed and sworn or not. The fact that the beneficiary of the compulsory portion is not entitled to an expert opinion from a publicly appointed and sworn expert has been clearly decided by the Federal Court of Justice (BGH, judgment dated 29.09.2021 - IV ZR 328/20).
Does a beneficiary of a compulsory portion who has disclaimed the inheritance also have a claim to a valuation?
Not only those who have been disinherited by the testator are entitled to a compulsory portion. Even someone who has been designated as heir but who is adversely affected by the appointment of a subsequent heir, an executor, a partition order or a condition or legacy can, if he or she disclaims the inheritance, claim the compulsory portion. In this respect, the question arises as to whether a person who has only acquired a claim to the compulsory portion by disclaiming the inheritance, just like a person who was disinherited by the testator from the outset, also has a claim to information and valuation. At least for the claim of the beneficiary of the compulsory portion to information and presentation of a list of the estate, the Federal Court of Justice has clearly decided this (BGH judgment of 30.11.2022 - IV ZR 60/22). The lead sentence to the decision states: "A beneficiary of a compulsory portion is entitled to information pursuant to Section 2314 (1) of the German Civil Code even after disclaiming his share of the inheritance pursuant to Section 2306 (1) of the German Civil Code." The fact that the BGH mentions the entire section 2314 para. 1 BGB in its decision, i.e. not only the claim to information and submission of an estate inventory pursuant to section 2314 para. 1 sentence 1 BGB, indicates that the decision also refers to the claim to valuation pursuant to section 2314 para. 1 sentence 2 alt. 2 BGB.
When does the claim to valuation become time-barred?
The claim to a compulsory portion is subject to a limitation period of three years in accordance with section 195 of the Civil Code. The period begins at the end of the calendar year in which the claim to the compulsory portion arose and the beneficiary of the compulsory portion became aware of the circumstances giving rise to the claim and of the person of the debtor or should have become aware of them without gross negligence (Sec. 199 (1) BGB).
The three-year limitation period also applies to claims for the provision of information and the determination of value in accordance with section 2314(1) of the Civil Code.
The various claims, i.e. the claim to payment of the compulsory portion, the claim to the provision of information, the claim to the submission of a (notarial) list of the estate and the claim to the determination of the value, are fundamentally to be distinguished from one another. They are different claims that can be asserted individually or jointly or in stages. This distinction can lead to problems in particular if the limitation period for the claims is to be suspended, e.g. by filing a lawsuit or if the parties reach an agreement on waiving the defense of limitation. For example, an action for information does not suspend the statute of limitations for the claim for payment. On the other hand, according to the prevailing opinion in case law and literature, information under § 2314 Paragraph 1 Sentence 1 BGB and a notarial list under § 2314 Paragraph 1 Sentence 3 BGB form a uniform claim of different degrees of strength, with the consequence that the action for information also interrupts the statute of limitations with regard to the claim for the creation of a notarial list. According to a decision of the Munich Higher Regional Court, however, this is not to apply to the claim for valuation pursuant to § 2314 Paragraph 1 Sentence 2 Alt. 2 BGB. This represents an independent claim in addition to the claim for information (OLG Munich, judgment dated 08.03.2017 - 20 U 3806/16). There are reservations about the opinion of the OLG Munich, if only because the beneficiary of the compulsory portion can only be required to pursue the claim for valuation if he/she has previously been provided with information that the item in question belongs to the estate at all or that the item is listed in the estate register. In addition, in the opinion of the Federal Court of Justice, all claims under section 2314 (1) of the Civil Code are non-genuine ancillary claims which are intended to enable the beneficiary of the compulsory portion to obtain the necessary knowledge for the assessment of the claim to the compulsory portion (Federal Court of Justice, judgment of 30.11.2022 - IV ZR 60/22). Despite these reservations about the decision of the Munich Higher Regional Court, it should be remembered to include the valuation claims when filing a lawsuit or an agreement on waiving the statute of limitations defense.