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Legal & Law

Insolvent estate – Heir liable with his assets

Assets are not a given when it comes to an inheritance; it is also possible for the estate to include debts. If that is the case, it may make more sense to reject rather than accept the legacy.
GRP Rainer LLP
GRP Rainer LLP
PR-Inside.com: 2016-02-01 08:52:29
GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: Succession law stipulates that the heir is liable for the testator’s debts with his own assets, which could entail the former’s personal ruin. If it is clear that the estate is insolvent, it might make sense to reject the legacy.


By rejecting the legacy, the heir renounces all of the rights and obligations associated with the inheritance. It even means that his entitlement to a compulsory portion lapses. In order for the legacy to be effectively renounced, it needs to be rejected within a period of six weeks after the inheritance has come to light. The rejection of the legacy has to be submitted in the proper form to the probate court.


Rejecting a legacy is a radical step that is recommended if it is clear that the estate consists mainly of debt. However, the testator’s financial situation is often unclear and can only be analysed with great difficulty. Under these circumstances, a detailed overview of the assets and liabilities pertaining to the estate ought to be prepared. To this end, it is necessary for cash assets, accounts, land holdings, liabilities, outstanding invoices, etc. to be carefully examined and offset against each other. In these cases, it may make sense to arrange for the administration of the estate, as this allows the heir’s liability to be limited. As a consequence, the existing debts are not settled with the heir’s private assets but instead using the assets present in the estate. It is possible to apply for the opening of estate insolvency proceedings if the latter proves to be insufficient.


In order to evaluate an estate it is necessary to adopt a holistic approach, which in turn necessitates appropriate expertise, e.g. when evaluating a property. It is equally important to assess whether the testator still had any tax liabilities or left behind illegal earnings. This can have serious consequences for the heir if he does not report these to the tax office. That is why it makes sense when there is doubt to have the estate examined before accepting or rejecting the legacy. Lawyers who are competent in the field of succession law advise you accordingly.


www.grprainer.com/en/legal-advice/law-of-succession.html
Press Information
GRP Rainer LLP
Hohenzollernring 21-23

50672 Cologne

Germany

Herr Michael Rainer
Lawyer, Managing Partner
069505060709
email
www.grprainer.com/en.html

Published by
Michael Rainer
+492212722750
e-mail
www.grprainer.com/en.html



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