Is information about the deceased's marriage required in the estate register?
The estate register must not only include assets, but also legal relationships that are important for the calculation of the compulsory portion claim. For example, whether the deceased was married and in which matrimonial property regime the deceased lived is decisive for the compulsory portion, for example whether a marriage contract was concluded and separation of property or community of property was agreed. Other matrimonial property regimes, in particular foreign matrimonial property regimes, are also possible and must be stated, even if the succession is governed by German inheritance law.
The information must also include whether divorce proceedings were pending. If this is the case, further information must be provided, namely whether the conditions for divorce were met, whether the divorce was requested by the deceased or whether the deceased had consented to the surviving spouse's application for divorce. This determines whether the spouse belongs to the group of legal heirs and is entitled to a compulsory portion or whether he or she no longer has any claims due to the status of the divorce proceedings. In turn, the statutory inheritance quota and thus the compulsory portion quota of the deceased's descendants also depends on this.
The information is therefore important for determining the inheritance quota, so it is needed to determine the basis for calculating the compulsory portion claims. With regard to a marriage of the testator, the following questions must therefore be answered as part of the estate inventory - but only if a special case arises.
1. was the testator married?
2 According to which legal system is the matrimonial property regime of the spouses assessed?
2.1 When did the couple get married?
2.2 Where did the couple get married?
2.3 What was the nationality of the spouses at the time of the marriage?
2.4 Where did the spouses live at the time of the marriage?
3. if German matrimonial property law applies, have the spouses concluded a marriage contract? If so, what matrimonial property regime have the spouses agreed?
4. were divorce proceedings pending at the time of the inheritance?
4.1 If yes, were the conditions for divorce met?
4.2 Was the divorce requested by the testator?
4.3 If not, did the deceased consent to his or her spouse filing for divorce?
What is meant by the „actual estate“?
The amount of the compulsory portion claim is determined on the one hand by the compulsory portion quota and on the other hand by the value of the estate. In order to be able to quantify his or her claim at all, the person entitled to a compulsory portion must therefore receive information about which assets belong to the estate. In addition to the right to information about the individual items of the estate, the beneficiary of the compulsory portion is entitled to an independent right to a valuation.
The calculation of the compulsory portion claims is based on the adjusted estate value. This is also referred to as the „net estate“. The net estate is the sum of the values of all estate items minus the estate liabilities. The items in the estate are also referred to as assets. The liabilities of the estate are also referred to as liabilities.
Estate items in this sense are not only physical objects such as cars, jewellery and real estate, but also claims, receivables and rights.
When the term „actual estate“ is used, this refers to the estate at the time of death. The heir must therefore submit a list relating to the date of death. The information regarding the deceased's actual estate must be provided with regard to the items of the estate that were in the deceased's estate at the time of death, i.e. at the time of the deceased's death. Estate items or estate assets that were no longer part of the deceased's assets before this cut-off date are therefore not part of the actual estate. However, assets that were no longer part of the deceased's estate prior to the inheritance may, under certain circumstances, be included in the information on the fictitious estate.
Example: If the deceased died on 31 January, for example, the exact bank balances including interest as at 31 January must be stated. Bank statements showing a balance as at 1 February are not necessarily meaningful if, for example, entries were still being made on 1 February. With regard to bank balances, the information that banks must provide to the tax authorities in accordance with § 33 ErbStG is helpful. This information lists the balances as at the reporting date.
The actual estate can therefore change considerably depending on whether the testator made any dispositions before his death. For example, if the deceased transferred CAN$ 100,000.00 from his currency account to his wife's account one day before his death, the actual estate on the day of his death will be CAN$ 100,000.00 less than it would have been if the deceased had died one day earlier.
The actual right to a compulsory portion relates to the actual estate. It is easy to recognise that the right to a compulsory portion could easily be circumvented by shifting assets even shortly before the death of the deceased if these shifts were no longer relevant in principle. However, lifetime dispositions to the detriment of the testator's assets can be significant in the context of the so-called Claim to a supplementary compulsory portion be.
What is meant by a „fictitious estate“?
As already mentioned, the actual estate as it appears on the date of death can depend very significantly on whether the deceased's assets were transferred - possibly even very shortly before the death. If the testator made purchases before death, this does not initially lead to an outflow of assets from a balance sheet perspective. For example, if the deceased purchased a painting for 10,000 US$ shortly before his death, his bank balance will have been reduced. However, the painting must now be added to the assets, which - assuming no change in value - must then also be recognised at 10,000 US$. Such a transaction would therefore have no mathematical effect on the compulsory portion claim - even if valuation difficulties can naturally arise in the case of non-liquid assets such as paintings and jewellery. As such transactions that are in an exchange relationship are therefore initially irrelevant, there is no special legal provision for them. The same also applies if the consideration received by the testator for the disposition of his assets has been used up, as it is of course basically up to the testator whether and to what extent he wishes to use up his assets during his lifetime, e.g. through giants, celebrations and a generally luxurious lifestyle. The testator himself is not subject to any limitations here, even if the expenditure is out of proportion according to the usual standards, at least up to the point where legal incapacity must be assumed. The situation is different if the testator transfers his assets without receiving anything in return. The legislator regulates such behaviour in such a way that, in addition to the right to a compulsory portion, which relates to the „actual estate“ on the date of inheritance, the person entitled to a compulsory portion is also entitled to a so-called Claim to a supplementary compulsory portion set aside. As the name suggests, the compulsory portion is to be supplemented under certain conditions. In fact, not only the compulsory portion is supplemented, but under certain circumstances even the inheritance share.
With regard to the fictitious estate, the heir must also provide information on gifts and gratuitous donations made by the deceased to the heir(s) and third parties. This also includes benefits of use that the testator has granted free of charge, in particular the use of living space.
What information must be provided on the deceased's immovable assets, in particular real estate?
The heirs' duty to provide information regarding the deceased's immovable assets extends in particular to the following assets:
- Developed properties
- Undeveloped properties
- Land used for agricultural purposes
- Condominiums
- Usufruct of real estate
- Residential rights
What are the typical factors that determine the value of physical assets (property)?
As the right to information is intended to provide the beneficiary of the compulsory portion with a basis for calculating his or her entitlement to a compulsory portion, the factors that are important for determining the value of these items must be stated in addition to the designation of the individual movable items. As a rule, the following factors are to be stated as value-forming factors with regard to the movable assets of the testator:
- Age
- Purchase date
- Manufacturer
- Serial numbers
- Information on functionality
- existing guarantee and warranty claims
- Condition of the item
- In the case of a motor vehicle, the mileage, the initial registration and information on the absence of accidents
How detailed must the information on the value-forming factors of the estate items be?
As part of his obligation to provide information, the heir must not only name the individual assets. Rather, the heir must also state the value-forming factors of the respective item of the estate in order to fulfil his obligation to provide information. In order for the beneficiary of the compulsory portion to be able to understand the value of the deceased's estate items on the basis of the information provided, the information must be provided in such a way that the beneficiary of the compulsory portion can determine which specific items are involved. This is a prerequisite for the person entitled to a compulsory portion to be able to determine the market value on the basis of the information provided.
For some estate items, it is difficult to specify all the factors that determine the value. These can arise on the one hand from the complexity of the individual items in the estate (real estate, jewellery) or from the quantity of items (e.g. in the case of extensive household effects).
With regard to real estate belonging to the estate, the question arises as to what information the testator must provide in the estate register. For example, should all details in the land register sheet be provided, or only details of the land register sheet, the location and the ownership structure? What information must be provided on the building development? In practice, however, there is rarely any dispute about the scope of the information expected from the heir in relation to real estate, as valuations are almost always requested and obtained. The information on the factors determining the value of the property can then be taken from the valuer's report. However, both claims, i.e. the claim for information by submitting an inventory of the estate and the claim for a valuation, are generally treated separately by case law. It is repeatedly stated in court decisions that the two claims must be distinguished, which can also be of significance for a different limitation period. The distinction between the claims means, among other things, that the heir who has been requested by the beneficiary of the compulsory portion to submit an inventory of the estate is not obliged to obtain an appraisal at the same time without a separate request. If the heir does so, he or she may not be able to deduct the costs of the valuation as a liability of the estate. This raises the question of how detailed the heir's information on the value-forming factors must be in order for the heir to fulfil their duty to provide information. In practice, the deceased's jewellery and household effects are particularly problematic.
With regard to jewellery belonging to the estate, the heirs usually lack the expertise to provide sufficient information on the value-forming factors. If the heir is aware of the purity or fineness of the precious metals used, for example because they are stamped on the piece of jewellery, they will be able to state this. With regard to the market value of a piece of jewellery, however, the information is only meaningful if the piece of jewellery - which is often the case - is only determined by the material value and the craftsmanship is not important beyond that. It is more difficult to specify the carat of the processed gemstones. The carat is not enough to determine the value. Cut, purity and colour are just as decisive for the value of a gemstone. In addition, of course, there is the state of use. Without special expertise, the heir will not be able to provide any information on the factors that determine value.
In practice, people try to remedy this by attaching pictures of the individual items of jewellery to the estate inventory. We also recommend this from time to time. However, it is unclear whether the person entitled to a compulsory portion can be referred to this or whether they can request that the heir describe the items in the estate in detail and provide information that would enable a valuation. Even if the beneficiary of the compulsory portion has not explicitly requested an appraisal, the heir must decide whether to have an appraisal drawn up or to take the risk of submitting an incomplete inventory of the estate. The latter alternative can be costly for the heir if the person entitled to the compulsory portion pursues their claim in court and the heir has to bear the costs of the legal dispute because they have been late in fulfilling their obligation. However, the heir will also be reluctant to commission a valuation without being asked because of the often very high costs involved. The argument that the beneficiary of the compulsory portion is financially liable for the costs of an appraisal, at least in the amount of their compulsory portion, is usually not valid. On the one hand, the heir must pay in advance and can only deduct the costs as a liability item in the estate register. On the other hand, the participation in costs depends on the compulsory portion, so that those entitled to a compulsory portion with only a small portion can find an effective lever to improve their negotiating position by insisting on a valuation.
Do details also have to be provided about items that are jointly owned by the deceased and their spouse or whose ownership is unclear?
The information on the deceased's movable assets must be provided in such a way that the person entitled to a compulsory portion is able to determine the value of the movable assets on the basis of this information. For this reason, the heirs are also obliged to state in the inventory of the estate those items in which the deceased was only involved by way of co-ownership or co-ownership.
Even if the ownership and possession situation is unclear, the object of the estate must be stated. The information is also required because otherwise the possibly uninformed assessment of the heir would be decisive as to whether an item belongs to the estate or not. As the person entitled to a compulsory portion can essentially only form an opinion based on the information provided by the heir, items that could belong to the deceased's property must also be stated - even if the heir is of a different opinion. It is likely to be important whether an item of the estate was in the deceased's possession at the time of the inheritance. Even if the item was not owned by the testator, it is advisable to state this with a corresponding note, which indicates an ownership situation that differs from ownership. The right to information is intended to enable the beneficiary of the compulsory portion to compensate for any deficits in their knowledge of the deceased's estate with the help of the information to be provided. This function of the right to information is incompatible with restrictions on the obligation to provide information about the deceased's movable assets from the point of view of co-ownership or an unclear ownership situation.
What rights and claims of the deceased must be disclosed in an estate register?
All rights and claims to which the deceased was entitled at the time of inheritance must be included in the estate register without exception. The category of rights and claims that is certainly the most important in practice are the Receivables from banks and credit institutions, as most testators held at least one account at the time of their death. Of particular importance are
- Balances in bank accounts,
- Balances in savings bank accounts,
- balances in savings accounts at banks and savings banks and
- Balances on fixed-term deposit accounts.
The obligation to provide information extends to stating the bank or savings bank holding the account, the branch and the account number or IBAN as well as whether it is an individual account of the deceased or a joint account.
The category of receivables from banks and savings banks also includes safe deposit boxes and their contents.
Securities custody accounts must also be disclosed, stating the office maintaining the custody account and the individual securities held in the custody account, together with a securities identification number that enables the securities account holder to be identified. Securities e.g. ISIN (International Securities Identification Number) and the quantity of the security (e.g. 1000 shares of Volkswagen (VW) vz. ISIN DE0007664039).
To the Receivables from employment relationships These include claims for holiday pay in lieu, claims for severance payments already made, bonus payments, death benefits and outstanding salary claims. The amount of the claim and the employer as the debtor must be stated.
The sub-category of participation under company law includes, for example. Company shares in BGB companies, partnerships, public limited companies and limited liability companies, as well as co-operative shares.
If the estate includes company shares, it is again not entirely clear to what extent the heirs must provide information about the company and its key figures. Certainly, the heirs must provide the information necessary to identify the company and the extent of the shareholding. However, the naming of all value-forming factors, i.e. all circumstances that are necessary to determine a company's value, should not be required as part of the information stage - at least not without further request, because the amount of data appears too extensive to be recorded in an estate register. In practice, problems also arise here less at the information stage, i.e. in the context of the estate inventory, as - similar to real estate - the valuation claim is usually also asserted and thus the value-forming factors of a shareholding under company law are worked out in the context of an expert's valuation report. The relevant case law also shows that the beneficiary of the compulsory portion is entitled to be provided with the documents, papers and deeds necessary to determine the value of the shareholdings. The same applies to this obligation to provide documents as to the deceased's real estate holdings. The beneficiary of the compulsory portion is also entitled to a valuation claim against the heirs with regard to the deceased's company shares and interests in companies.
It is not important whether the companies or firms are legal entities or partnerships. It is true that different publicity regulations apply depending on the legal form. However, this distinction is of no further significance in the law on compulsory portions, as the beneficiary of the compulsory portion is entitled to information on the shareholding in a company and information on the factors that determine the value, irrespective of the legal form of the company. Furthermore, it is irrelevant for the right to information in principle whether the companies and firms were continued or discontinued after the death of the testator, as only the time of the inheritance is relevant due to the reference date principle. However, the prospects of future profits from the perspective at the time of the inheritance will of course influence the value of the company shareholding and a closure of the business, liquidation or insolvency of the company at a later date is likely to have already been planned at the time of the inheritance, at least if the time lag between the inheritance and the event is not too great. The right to information also extends to any compensation claims arising from the articles of association.
With regard to the duty to provide information, it does not matter whether the claims in question are enforceable. Therefore, the claims and rights must also be included in the estate register if the claims are time-barred or disputed. However, additional information must then be provided, i.e. whether the claims are already time-barred and whether the defence of limitation has already been raised. If a claim is disputed, the circumstances from which the uncertainty regarding this claim arises must be described. As in the case of movable assets belonging to the estate, claims and rights whose existence or enforceability is questionable must also be stated. Here, too, it is not a matter of the heir's lay perception. Ultimately, however, there must be some indication for the heir that the claims and rights belonged to the deceased.