Introduction
International inheritance law governs how estates with a foreign connection are to be handled legally. Although inheritance law in Germany is anchored in the German Civil Code (BGB), once assets, heirs, or the testator themselves have a foreign connection, further legal provisions come into play. The European Succession Regulation (EU Succession Regulation) has created a unified framework for inheritance cases within the European Union. It stipulates which legal system is to be applied to an estate, for example, when the habitual residence of the testator or their nationality lies in another EU member state. The location of assets such as real estate can also play a role. Thus, the EU Succession Regulation ensures that inheritance cases with an international dimension within European states are handled according to clear rules, reducing uncertainties in estate settlement. Nevertheless, international inheritance law remains a complex area requiring a precise review of the respective legal situation and reference points.
Connecting factors for determining the applicable law
In international inheritance cases, the question of which inheritance law applies is of central importance. The most important connecting factor according to the European Succession Regulation (EU Succession Regulation) is the habitual residence of the testator at the time of death. This means that, as a rule, the law of the state where the testator last had their centre of life applies. However, the testator can also explicitly choose that the law of their nationality applies to the estate. Other relevant connecting factors include the testator’s residence or the location of assets, such as real estate in different countries. The choice of applicable law has significant consequences for the rights of heirs, particularly with regard to the compulsory portion and statutory succession. Anyone wishing to make use of the options for choosing the applicable law should therefore become familiar with the relevant regulations at an early stage and carefully consider the consequences for their own estate.
German compulsory portion claim versus English inheritance law
Testamentary freedom in international inheritance law has its limits. In its judgment of June 29, 2022, the Federal Court of Justice (BGH) ruled that a testamentary disinheritance of the compulsory portion under English inheritance law is not enforceable in Germany and violates German ordre public (Case no. IV ZR 110/21). Therefore, enforcement of the claim for the compulsory portion can have considerable significance internationally, particularly when persons entitled to a compulsory portion want to assert their claims in Germany.
International inheritance cases are no longer an exception. One key question is which inheritance law applies. The European Succession Regulation allows for the possibility of a choice of law. However, the various national regulations are not always compatible. Thus, the German law of compulsory portion is protected by ordre public if foreign inheritance law is to be applied, according to the commercial law firm MTR Legal Rechtsanwälte, which advises, among other things, on international inheritance law. Persons entitled to the compulsory portion include, in particular, children as well as spouses and parents of the testator.
For example, if a son is entitled to his compulsory portion, he can assert it even if foreign inheritance law provides for a disinheritance of the compulsory portion. The assertion of the claim is then governed by German law if the ordre public applies.
Example: A German testator with residence in England names only his wife as sole heir in his will, excluding his children. While this would be possible under English law, in Germany the children as persons entitled to the compulsory portion can successfully assert their claim.
English inheritance law does not recognize a compulsory portion as in Germany
Under German inheritance law, close relatives of the testator are entitled to a compulsory portion – those entitled include, in particular, children, spouses and, under certain conditions, grandchildren. English inheritance law does not recognize a claim to a compulsory portion in this sense. The Federal Court of Justice (BGH) has now made it clear that the claim to the compulsory portion under German law cannot be circumvented so easily.
In the underlying case, a British national who lived in Germany for over fifty years and had his last residence there, drew up a notarial will in 2015 naming the defendant as sole heir. He chose English inheritance law. He had expressly excluded his child, whom he had adopted in 1975, from the inheritance. The adoption contract stated that all inheritance and compulsory portion rights were excluded.
After the father’s death, however, the child asserted information claims in order to claim his compulsory portion. These are claims that persons entitled to the compulsory portion may assert against the heirs to enforce their rights. The defendant refused to provide information, referring to the choice of law in the will: under English law, there is no claim to a compulsory portion, so no information needs to be provided.
It should be noted that grandchildren, under certain circumstances, may also be entitled to a compulsory portion.
Violation of ordre public
The Federal Court of Justice (BGH) had to clarify whether depriving someone of the compulsory portion under English inheritance law was valid or whether it violated German law (ordre public). The Karlsruhe judges clarified that the German law of compulsory portions is an essential component of the national inheritance law, intended to protect close relatives from complete disinheritance; this includes children and spouses as well as parents as further entitled persons. This is not merely a civil law regulation but a constitutionally protected institution. English law does not provide for a comparable, non-needs-based claim. In cases of proven need, only an application for an “adequate financial provision” can be made, which a court then decides upon.
Such a regulation is clearly contrary to German values. The choice of English inheritance law here violates German ordre public and cannot, therefore, be applied, according to the BGH. In the underlying case, German inheritance law must be applied. The son is considered a person entitled to the compulsory portion and thus has a claim for information against the defendant sole heir, and can, if necessary, assert his claim to the compulsory portion.
Moreover, it should be noted that German inheritance law may, under certain circumstances, lead to a restriction of compulsory portion claims, for example, in cases of disinheritance or offsetting of gifts.
When calculating the claim, the amount of the compulsory portion is decisive, as it is determined by the value of the estate and the statutory share.
Limits of the choice of law
The BGH’s decision shows that the choice of law in international inheritance law has its limits and must not lead to essential protection mechanisms, such as the compulsory portion, being completely circumvented. The choice of inheritance law should therefore be carefully considered, as last will dispositions may not be implemented as intended. In the international context, the EU Succession Regulation stipulates that, as a rule, succession is governed by the law of the testator’s habitual residence, unless a valid choice of law has been made. European inheritance law does permit a choice of law, but this is only effective if it does not violate fundamental principles of German law. Furthermore, under the EU Succession Regulation, a binding regulation, the choice of law always applies uniformly to the entire estate. “Splitting,” e.g., German law for domestic real estate and foreign law for overseas accounts, is not possible.
Although the choice of law in international inheritance law is an important tool for estate planning, it is limited by the respect for fundamental German legal principles. Thus, compulsory portion claims cannot be entirely excluded by choosing a foreign inheritance law, as limitation of choice is specifically provided for regarding the compulsory portion when the application of the chosen law is incompatible with German law. Anyone living abroad or owning international assets should therefore seek legal advice at an early stage and draft their will clearly and in accordance with the law in order to avoid later legal disputes.
Estate division and inconsistent legal situation
In practice, it may happen that different parts of an estate are governed by different legal systems – this is known as estate division. Such a situation often arises when the testator owns assets in several countries, or when the national inheritance laws involved have different rules concerning succession and the rights of heirs. The result is an inconsistent legal situation that can significantly complicate estate settlement. It becomes particularly problematic when rights to compulsory portions or the recognition of wills are regulated differently in the countries concerned. In such cases, it is advisable to consult an experienced lawyer specializing in inheritance law in order to best protect the interests of the heirs and the testator and to ensure smooth estate administration. Proactive estate planning can help prevent conflicts and uncertainties in the event of inheritance.
Recognition of foreign wills
The recognition of foreign wills is a central topic in international inheritance law. According to the European Succession Regulation, wills are generally recognized in the country where they were made, provided they comply with the local form requirements. This means that a will validly made in an EU member state can also take effect in other EU countries. However, there are exceptions: If the content of the will violates the ordre public of the state in which it is to be recognized, recognition may be refused. In addition, bilateral or multilateral agreements between individual countries can further facilitate the recognition of foreign wills. Anyone wishing to ensure that their will is recognized in several countries should seek advice from a specialized lawyer in inheritance law to ensure compliance with all relevant formal requirements and the validity of the will in an international context.
European Certificate of Succession (European Certificate of Inheritance)
The European Certificate of Succession, also known as the European Certificate of Inheritance, is an important tool for simplifying estate administration in cross-border inheritance cases within the European Union. It is issued by a competent court in an EU member state and confirms the status of heirs or the powers of the estate administrator. The European Certificate of Succession is recognized in all EU member states and enables heirs to prove their rights to the estate easily – e.g., to banks, authorities, or land registries. The prerequisite for issuance is that the testator had their last habitual residence in an EU state and the applicant presents the necessary proof of their status as heir. The European Certificate of Succession contributes to making the handling of international inheritance cases more efficient and legally secure.
MTR Legal Rechtsanwälte advises on international inheritance law, especially regarding the participation of persons entitled to a compulsory portion in the estate.
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