Sale of the inherited portion
When does it make sense to sell the inheritance?
There can be many different reasons for wanting to sell your inheritance.
If several persons have inherited a share of the estate, they form a community of heirs. It should be noted that none of these co-heirs is authorised to dispose of an individual item of the estate independently. The share of a co-heir in the estate is calculated on the basis of the respective inheritance quota. Among other things, the heir can sell this inheritance share in order to withdraw from the community of heirs and to generate free financial resources.
In addition to the financial advantage, emotional burdens or disputes within the community of heirs can also lead to the heir wanting to sell their share of the inheritance. In practice, such disputes often arise within the community of heirs. The main reason for this is that communities of heirs are generally not organised for the long term. Their main aim is to dissolve as quickly as possible by dividing the inheritance among the heirs. However, these settlements often lead to conflict situations that can make a smooth division of the estate impossible.
In the worst-case scenario, such conflicts can even lead to real estate or land having to be auctioned off, which the testator actually wanted to avoid in most cases. In such situations, the sale of an inheritance share can be an effective solution to immediately free oneself from the deadlocked situation within the community of heirs. It should be noted that the testator cannot usually exclude this possibility by means of a will or other testamentary dispositions, as a legal prohibition pursuant to Section 137 BGB would not be enforceable.
How can I sell my inheritance?
If an inheritance is to be sold, three conditions must be met. Firstly, a distinction must be made as to whether the heir inherits as part of a community of heirs or as a sole heir. If you are the sole heir, you are exempt from the requirements for the sale of the inheritance, which are explained further below. The rightful heirs must be established for the sale. This is done either by means of a certificate of inheritance or a will. In addition, the contents of the estate must be largely finalised. This means that all of the deceased's assets and debts must be known and recorded.
If the heir willing to sell and a buyer agree on the purchase of the inheritance share, an inheritance share purchase agreement must be drawn up. In accordance with Section 2033 BGB, this must be notarised. If it is not a sole heir, but a co-heir as part of a community of heirs who is selling their share of the inheritance, the other co-heirs must be informed of the purchase.
Once the sale has been successfully completed, the seller is no longer part of the community of heirs and instead the buyer joins the community of heirs as an heir.
Can I also give away my inheritance?
It is also possible to give away a share of the inheritance. However, it should be noted that this may have consequences under gift tax law. This also applies to so-called mixed gifts. This is assumed to be the case if the inheritance is sold for significantly less than its value. In the case of a gift, however, the other co-heirs have no right of first refusal and therefore have no protection against a third party becoming part of their community of heirs.
What prices can be realised?
Determining the price when selling an inheritance is extremely difficult. Not only the existing assets, but also known liabilities must be taken into account. From the perspective of a potential buyer, it must also be considered that new liabilities may arise that were unknown before the purchase.
In contrast, when valuing assets, the aim is always to obtain an estimate based on current market prices. In the case of real estate, for example, this can be done by means of an expert opinion or by offering the property for sale on popular online portals in order to await offers. Ultimately, an overall package of the valued assets and liabilities is put together before the sale of the inheritance is finalised.
In any case, the sale of an inherited share should always be advantageous compared to a possible partition auction.