If the testator has stipulated that a certain person is to be the first heir, there will always be a subsequent heir. Where there is a subsequent heir, there is also a prior heir. Prior and subsequent heirs are inextricably linked. The prior heir is a „real“ heir, but only for a limited period of time. In the event of a subsequent inheritance, often upon the death of the prior heir, the estate of the deceased passes to the subsequent heir.
Subsequent heir or final heir?
If a will stipulates that a certain person should only be an heir after another person, it is not always clear whether the intention is to appoint them as a subsequent heir or as a final heir. Legally, this makes a big difference. The question often arises in the context of interpreting joint spouses„ wills. Spouses often initially appoint each other as sole heirs and also stipulate that the (joint) children should receive the assets after the death of the longer-living spouse. However, this still does not clarify whether the surviving spouse should be the full heir and the assets of the first spouse to die should pass to the surviving spouse without separation and restriction (the so-called “unity solution„) or whether the surviving spouse should only be the first heir and the assets of the first spouse to die should pass to the first heir, but should be separated from his or her own assets and form a separate estate (the so-called “separation solution").
With the unity solution, the children do not become the heirs of the spouse who dies first, but only the heirs of the spouse who dies last. In legal terms, the children are therefore disinherited in the first inheritance case. In the second inheritance case, in which the children inherit the surviving spouse, they are referred to as „final heirs“. In the unified solution, the surviving spouse becomes the full heir and receives unrestricted power of disposal over the estate upon death, which he or she can also use for himself or herself without further ado. The final heirs have no control over the estate, which passes entirely to the assets of the surviving spouse.
With the so-called separation solution, on the other hand, the children also become heirs of the first deceased spouse on the death of the longer-living spouse, but at a later date. They also become the heirs of the longer-living spouse with regard to their own assets. In this case, the longer-living spouse is only a prior heir. The children are subsequent heirs with regard to the assets of the spouse who died first and full heirs with regard to the assets of the longer-living spouse. With the separation solution, the children therefore inherit two different estates when the longer-living parent dies - even if the death of the first deceased parent occurred a long time ago.
Can the previous heir freely dispose of the estate?
In principle, the previous heir is authorised to dispose of the individual items of the estate, i.e. to sell them, transfer ownership, assign claims, etc.
However, the statutory provisions restrict the prior heir's power of disposal. The two most important restrictions are the Prohibition on the disposal of land and the ban on gifts.
Pursuant to Section 2113 (1) of the German Civil Code (BGB), a disposition by the previous heir of a property or right to a property belonging to the estate or of a registered ship or ship under construction belonging to the estate is ineffective in the event of subsequent succession insofar as it would frustrate or impair the right of the subsequent heir. This is referred to as a prohibition on the disposal of land. This is not entirely correct from a legal point of view, because although the disposition remains possible, it becomes retroactively ineffective upon the occurrence of the succession. In practice, however, a sale without the consent of the subsequent heir is de facto unrealistic if a note on the subsequent heir is entered in the land register.
Pursuant to Section 2113 (2) BGB, transfers of inheritance items by way of gift are also invalid in the event of a subsequent inheritance. This applies not only to land, but also to all types of inheritance items (e.g. movable property). This is referred to as a gift prohibition.
What is an exempt prior heir?
The testator may partially release the prior heir from the restrictions and obligations imposed by law.
There is no single type of exempt prior heir. Rather, the question must be asked as to which specific restrictions the testator has exempted the previous heir from. It is conceivable, for example, that the testator may have exempted the previous heir from the obligation to invest money in a gilt-edged account, but that the previous heir is still subject to the prohibition on disposing of property. Whether the previous heir is exempt at all and to what extent the exemption from the statutory restrictions is intended or not can often only be clarified by a precise interpretation of the testamentary disposition. The mere designation of the previous heir as the „sole heir“ does not necessarily mean an exemption, because the non-exempt previous heir can also be the sole heir to the estate for a limited period of time. If there is a dispute between the previous heir and the subsequent heirs as to whether or to what extent the previous heir is exempt from the statutory obligations, this can be clarified by means of an action for a declaratory judgement.
The exemption option relates not only to restrictions on the power of disposal, such as the so-called prohibition on disposing of land, but also to other obligations such as proper administration, gilt-edged investments, accounting, etc.
The testator may release the prior heir from the following obligations and restrictions:
- from the prohibition on disposing of land (Section 2113 (1) BGB),
- from the deposit obligation in the case of disposals of land charges, mortgage claims or annuity debts (§ 2114 BGB),
- from the obligation to deposit securities when selling securities (§ 2116 BGB),
- from the obligation to invest money in a gilt-edged account (§ 2119 BGB),
- from the obligation of proper administration (Section 2130 (1) BGB),
- from the obligation to render accounts (Section 2130 (2) BGB),
- from liability in accordance with § 2131 BGB,
- from the obligation to pay compensation (Section 2134 BGB).
Can the previous heir be released from all legal restrictions?
This is not possible. Even the testator cannot release the previous heir from the obligation to draw up an inventory of the estate. The previous heir is also always subject to a prohibition on gifts. Even in the case of the greatest possible exemption of the prior heir, the principle remains that what takes the place of estate items belongs to the estate again (principle of urgent surrogation). If the exempt prior heir sells an item that belongs to the estate, the proceeds of the sale also belong to the estate again. Furthermore, the restriction on enforcement also applies to the exempt prior heir. Compulsory dispositions by the (exempt) prior heir's own creditors are ineffective against the subsequent heir in the event of a subsequent inheritance.
Can the previous heir use up the estate assets?
A distinction must be made between the power of disposal and the question of whether the previous heir may utilise the estate. As a general rule, the previous heir is only entitled to the utilisation of the estate. The previous heir can rent out property and keep the rental income. Cash assets and account balances can be invested by the previous heir and the interest income kept for themselves. In principle, the previous heir can therefore only use the interest from the estate assets. It is true that the previous heir has the right of disposal over bank accounts and custody accounts and can therefore instruct the bank to pay out or transfer funds (see above). In principle, however, the previous heir may not utilise the estate assets. This also applies to cash assets and account balances. If he or she sells individual items of the estate, e.g. a car, the purchase price received is returned to the estate. This means that the previous heir cannot use the proceeds of the sale for himself, but must separate the money received for the object of the estate from his own assets and can only use for himself any interest earned by investing the money. The same applies if the previous heir sells a property with the consent of the subsequent heir (see above on the power of disposal). He cannot use the proceeds of the sale for himself. He can only invest them profitably and, if necessary, use and consume the interest income for himself.
Since the prior heir therefore only receives the estate for use for a limited period of time and the estate does not pass to the heirs of the prior heir but to the subsequent heirs in the event of succession, the prior heir is obliged to preserve the estate in its substance if he is not released from this obligation by the testator. This corresponds to the fact that, pursuant to Section 2130 BGB, the previous heir is obliged to hand over the estate to the subsequent heir after the succession has taken effect in the condition that would result from the continued proper administration of the estate until it is handed over. The obligations of the previous heir to properly administer the estate and to bear the usual maintenance costs are derived from this (§ 2124 Para. 1 BGB). The law does state that the previous heir is obliged to hand over the inheritance to the subsequent heir. However, since in many cases the subsequent heir inherits upon the death of the previous heir, the obligation to surrender the inheritance in these cases falls to the heirs of the previous heir.
Can the testator authorise the previous heir to use up the estate for himself?
The restriction of the previous heir not to use up the substance of the estate is derived from the provisions of Section 2130 BGB and Section 2134 BGB. Pursuant to Section 2130 BGB, the previous heir must surrender the inheritance to the subsequent heir in a condition that corresponds to proper administration. If, for example, the previous heir has used money, bank balances or other estate items for himself, he is obliged to pay compensation in accordance with § 2134 BGB (as the subsequent inheritance usually occurs with the death of the previous heir, the obligations usually fall on the heirs of the previous heir). However, the testator can also release the previous heir from the obligations under Sections 2130 and 2134 in accordance with Section 2316 BGB. If the previous heir is also released in this respect, he or she is not obliged to preserve the substance of the estate and hand it over to the subsequent heir in accordance with proper administration. If he has used money for himself, e.g. because of his lavish lifestyle, the previous heir who has been exempted by the testator in this respect is not obliged to pay compensation. If he or she has not handled estate items with care, the subsequent heir will receive them in an improper condition. The testator can therefore also exempt the previous heir in this respect and allow him to use the assets for himself. Only gifts remain prohibited even to the exempted prior heir, in the sense that dispositions by way of gift are retroactively invalid upon the occurrence of the subsequent inheritance - subject to acquisition in good faith.
What control rights do the subsequent heirs have?
If the previous heir breaches his or her duties in the administration of the estate, this leads to liability towards the subsequent heir. It is conceivable that the subsequent heir only realises that the previous heir has administered the estate in breach of his or her duties after the subsequent inheritance has occurred - i.e. often only after the death of the previous heir. The liability for the administration of the estate in breach of duty may then be borne by the heirs of the previous heir.
However, the subsequent heir should not wait until after the inheritance has been received to investigate whether the previous heir has administered the estate correctly. Even before this, the subsequent heir has significant rights and can control the previous heir. To this end, the subsequent heir first has the right to demand that the previous heir provide him with a List of estates (§ 2121 BGB).
The subsequent heir can also Determination of the condition of the estate by an expert (2122 BGB).
If the subsequent heir realises before the subsequent inheritance takes effect that the previous heir is not managing the estate properly, he or she may be able to demand security and even the appointment of a court administrator (Sections 2127-2129 BGB).
Is the estate liable for the previous heir's own liabilities?
In the hands of the previous heir, the estate forms a Special assets. The previous heir must keep his or her own assets separate from the estate, as the special assets are to pass to the subsequent heir after the subsequent heir's death. This separation between the pre-heir's own assets and the estate requires the estate to be protected from the pre-heir's creditors. The creditors of the previous heir are not creditors of the estate.
However, if the previous heir uses estate assets to satisfy his creditors, i.e. to settle his own liabilities, a creditor may not be able to take recourse against the subsequent heir at a later date. In this respect, the provisions on the protection of good faith apply. A creditor of the previous heir usually cannot know whether the previous heir is paying his own debts with the special assets of the estate or with his own assets.
In the case of real estate, the possibility of acquisition in good faith is usually eliminated by the ex officio entry of a subsequent heir's note in the land register in accordance with Section 51 GBO. Although this does not block the land register, an acquisition by the previous heir regularly fails due to section 892 para. 1 sentence 2 BGB.
If a creditor of the previous heir has obtained an enforcement order against the previous heir due to the previous heir's own debts and the creditor of the previous heir attempts to enforce not only against the previous heir's own assets, but also against an object that belongs to the special assets of the estate, the subsequent heir can file an action to oppose enforcement in accordance with 773 ZPO and thus prevent the realisation of the assets of the estate.
The estate covered by the subsequent inheritance is therefore not liable for the previous heir's own liabilities. It does not matter whether the liabilities arose before the inheritance was received or were only created during the administration of the estate by the previous heir. If the previous heir becomes impoverished, for example because he or she has to go into a nursing home and the care costs cannot be met from his or her own assets and income, the previous heir does not have to access the estate. Enforcement measures by creditors of the previous heir are ineffective upon the occurrence of the subsequent inheritance to the extent that they frustrate or impair the right of the subsequent heir (2113, 2115 BGB).
Can the previous heir also claim the compulsory portion and, as a spouse, any gain?
If the prior heir accepts the (prior) inheritance, he or she cannot claim the compulsory portion. The right to a compulsory portion also requires that the beneficiary would have become a legal heir without the testamentary disposition and belongs to the group of persons entitled to a compulsory portion. According to Section 2303 para. 1 BGB, descendants of the deceased (children, grandchildren, etc.) and, according to Section 2303 para. 2 BGB, the spouse of the deceased and the parents of the deceased are entitled to a compulsory portion. Furthermore, there is no entitlement to a compulsory portion if the beneficiary has actually become an heir. The prior heir is an heir and therefore not entitled to a compulsory portion if he or she accepts the inheritance. If the beneficiary appointed as a prior heir wishes to assert his or her claim to a compulsory portion, he or she must disclaim the inheritance. There is another special feature here: in principle, the person who disclaims an inheritance is not entitled to a compulsory portion. However, there are legal exceptions to this: A person entitled to a compulsory portion who is appointed as an heir, but is nevertheless subject to certain restrictions, can disclaim the inheritance without losing the right to a compulsory portion. One such restriction is the burden of a subsequent inheritance. Section 2306 para. 1 of the German Civil Code (BGB) expressly stipulates that a person entitled to a compulsory portion who has been appointed as an heir and is restricted by the appointment of a subsequent heir can demand the compulsory portion if he or she disclaims the inheritance. In the case of the deceased's spouse as a person entitled to a compulsory portion, there is the special feature that they can disclaim the inheritance and claim the compulsory portion regardless of any encumbrance (Section 1371 para. 3 BGB).
If the previous heir has also been bequeathed a legacy, it should be noted that the beneficiary of the compulsory portion who has been bequeathed a legacy can only claim the compulsory portion in full if he or she rejects the legacy. However, if they accept the bequest and it is less than the compulsory portion, they can only claim the remaining compulsory portion (Section 2307 para. 1 sentence 2 BGB).
If the spouse of the deceased rejects the inheritance, he or she can also assert a claim to equalisation of gains in addition to the compulsory portion, provided that the spouses lived under the statutory matrimonial property regime of community of accrued gains. If the spouse was also bequeathed a legacy, the spouse must note that in order to be able to claim the gain, they must not only waive the inheritance but also the legacy (Section 1371 para. 2 half-sentence 1 BGB).
The deadline for the waiver is only 6 weeks in accordance with Section 1944 para. 1 BGB. However, the period does not begin before the probate court announces the disposition of property upon death in accordance with Section 1944 para. 2 sentence 2 BGB.