However, levels of knowledge about who is entitled to a legal portion, the scope of their rights and ways of avoiding or reducing such claims vary widely – from complete ignorance, via dangerously superficial “half‑knowledge”, through to unfounded fears. This is hardly surprising in view of the large number of court decisions on the many different constellations.
Fundamentals
Article 14(1) of the German Basic Law (Grundgesetz – GG) grants, among other things, the freedom of testation. In broad terms, this means that everyone may, by making a testamentary disposition, determine who is to be their heir and thus universal successor.
Article 14(1) sentence 1 GG, read together with Article 6(1) GG, which guarantees protection of the family, restricts this freedom by way of the law on legal portions (Pflichtteilsrecht), i.e. the right to a compulsory portion. The Federal Constitutional Court has repeatedly confirmed that this right to a compulsory portion itself enjoys constitutional status and forms part of German public policy.
Who is entitled to a legal portion?
Section 2303 of the German Civil Code (Bürgerliches Gesetzbuch – BGB) identifies the persons entitled to a legal portion: spouses or registered civil partners, descendants and parents of the deceased. Brothers and sisters, nephews and nieces, uncles and aunts have no such entitlement. Likewise, unmarried partners have neither a statutory right to inherit nor a statutory right to a compulsory portion.
Even among these close relatives, only those are entitled to a legal portion who have been excluded from the intestate succession by a will or other testamentary disposition.
Example
The deceased leaves a spouse, one child, one grandchild and his surviving mother. By will, he appoints Borussia Dortmund as his sole heir.
In this constellation, only the spouse and the child are entitled to a legal portion, because only they would have been heirs under the intestacy rules. The grandchild is excluded from the intestate succession by the child (§ 1924(2) BGB). The child, as heir of the first order, also excludes the deceased’s parent as heir of the second order (§ 1930 BGB).
The right to a compulsory portion can only be excluded by a notarised agreement between the testator and the person entitled, or on the basis of so‑called “unworthiness” to receive a legal portion (Pflichtteilsunwürdigkeit) under §§ 2339, 2345 BGB (for example, attempted killing of the testator, or serious criminal offences against testamentary dispositions). In practice, such cases of unworthiness are rare.
By contrast, familiar arguments such as “there has been no contact for decades”, “they have not cared at all in recent years” or “we have only had disputes for years” are not sufficient to exclude the right to a legal portion.
Nature of the claims
If, on death, there are persons entitled to a legal portion who have been excluded from the intestate succession, or who receive by will less than they would have received on intestacy (for example, appointment as heir of 1/1000 or a legacy of 2 euros), the question arises what rights they have.
A frequent misunderstanding is that the person entitled to a compulsory portion is, in some sense, an heir. This is not the case. The person entitled to a legal portion does not participate in the estate and has no rights in relation to the administration or realisation of the estate. The claim to a legal portion (Pflichtteilsanspruch) is a pure monetary claim against the heir or heirs, calculated by reference to the value of the estate.
To determine the value of the estate, the person entitled to a legal portion has, in principle, only one instrument: the heirs. Under § 2314 BGB, they may require the heir(s) to provide full and comprehensive information about the composition of the estate and to present an orderly schedule of assets (Nachlassverzeichnis). They cannot demand information about the heir’s own assets or those of the deceased’s spouse.
In addition, they may require the heir, at the expense of the estate, to obtain professional valuations of individual estate assets, in particular real property.
These often highly inconvenient rights of inquiry and valuation must be handled by the heir with the greatest possible care. The person entitled to a legal portion may, regardless of the quality of the heir’s own information, insist that the estate inventory be taken by a notary.
If there is a substantiated suspicion that the heir has not exercised the required care when providing information or has deliberately concealed assets, the person entitled to a legal portion may also require the heir to swear an affidavit as to the correctness and completeness of the information provided. A false affidavit is punishable as a criminal offence under § 156 of the German Criminal Code (Strafgesetzbuch – StGB).
Amount of the legal portion
Once the assets and value of the estate have been established (which often gives rise to extensive disputes in cases involving substantial estates, significant real estate holdings and valuable movable assets), the precise amount of the legal portion must be calculated. This is done according to the so‑called legal portion share (Pflichtteilsquote), which amounts to one half of the intestate share.
- Example
The unmarried deceased leaves one child, one grandchild and his mother. By will he appoints Borussia Dortmund as his sole heir. The child would have been the sole heir on intestacy in this constellation. The child’s legal portion share therefore amounts to 1/2. The grandchild and the surviving parent would not have been heirs on intestacy and are therefore not entitled to a compulsory portion.
- Example
The deceased, married under the statutory matrimonial property regime, leaves his wife and two children. In a “Berlin will” (joint will of spouses) he has appointed his wife as sole heir. On intestacy, the wife would have inherited 1/2 and each child 1/4. The children have been disinherited by the will and are therefore entitled to a legal portion of 1/8 each.
Reducing the legal portion
As follows from the above, it is difficult in principle to exclude the right to a legal portion without the cooperation of the person entitled. In estate planning, the question therefore frequently arises how potential claims to a legal portion of unwanted children can, at least, be reduced. In principle, there are two approaches:
- bringing “new” persons entitled to a legal portion into play, e.g. through marriage or adoption; and
- reducing the estate.
While the former is largely self‑explanatory, attempts to reduce the estate are fraught with difficulties. The legislature has recognised that many testators may be tempted to deplete their estate during their lifetime in order to disadvantage persons entitled to a compulsory portion. In addition to the “ordinary” claim to a legal portion, the law therefore provides for a supplementary claim (Pflichtteilsergänzungsanspruch) under § 2325 BGB: where the testator makes gifts without adequate reason, the transferred assets are notionally added back to the estate and the legal portion is calculated by reference to this “notional” estate.
Many people are aware that such gifts are only taken into account if they were made within ten years prior to death and then, under § 2325(3) BGB, on a tapered basis. What is less well known is that, in the case of gifts between spouses, the famous ten‑year period does not start to run at all. As a result, lifetime transfers between spouses by way of gift will, as a rule, not reduce the legal portion claims of descendants.
Another particularity in this context is the German Federal Court of Justice’s so‑called “enjoyment” case law (Genussrechtsprechung): if the donor purports to give away an asset but, in economic terms, retains the enjoyment of it and does not effectively remove it from their wealth, the ten‑year period under § 2325(3) BGB does not begin to run.
The classic textbook example is the transfer of the family home while reserving a right of usufruct (Nießbrauch). The entry in the land register will show a change of ownership, but the testator remains, by virtue of the reserved right of usufruct, the “master of the house” for all practical purposes.
The details of this “enjoyment” jurisprudence are highly complex and controversial. This is illustrated, for example, by a more recent decision of the Higher Regional Court (Oberlandesgericht – OLG) Hamm.
In that case, a nearly 90‑year‑old testator, a retired district court director, transferred the property he owned to his granddaughter. For his wife, who was also nearly 90, he reserved a right of abode (Wohnrecht) for life. On the same day, he concluded with his granddaughter a life‑long tenancy agreement at a rent significantly below the market level and reserved in the transfer deed various rights to re‑transfer the property, including where the granddaughter wished to transfer, encumber or predecease in relation to the property.
On this basis, one might have thought that, whether by virtue of his marital duties of cohabitation and support, or by virtue of the tenancy agreement and at the very least the extensive rights of re‑transfer, the testator would remain, in substance, “master of the house” and able to make unrestricted use of the property until his death.
The OLG Hamm took a different view. It held that the combination of tenancy agreement, right of abode for the wife and re‑transfer rights was not equivalent to a comprehensive right of usufruct, with the result that the limitation period under § 2325 BGB began to run. In consequence, the gifted property no longer formed part of the notional estate for the purposes of calculating the legal portion in respect of the testator, who died at nearly 100 years of age.
Conclusion
This case and the wider framework show that, in the field of compulsory portion law, there is almost always scope for structuring – both for the forward‑looking testator, provided that the adviser takes claims to legal portions into account in estate planning and starts early to prepare the estate and the heirs for such claims, and for the person entitled to a legal portion who has been excluded from inheritance by will. To enforce their rights to information, valuation and payment, the latter will, however, generally require specialist legal advice.