Deferral of a claim to a compulsory share is only possible if the deferral enables the heir to fulfil the claim to a compulsory share in the first place
Heirs often find themselves in financial difficulties when those entitled to a compulsory share – because they have been disinherited by the testator – assert their claim to a compulsory share against the heirs. This is because the compulsory share, which is intended to guarantee the beneficiary’s minimum share of the estate, is, in principle, a monetary claim. If the estate then consists largely of property or shareholdings in companies, the heir may find themselves forced to sell off the estate (often at a loss) in order to satisfy the claim to the compulsory portion. This can result in undue hardship. The law therefore provides for the possibility, under certain conditions, of deferring the fulfilment of the claim to a compulsory share. This was precisely what the defendant had in mind in the case described in more detail below (partial and final judgement Rostock Higher Regional Court dated 20 June 2019, Ref. No.: 3 U 32/17).
The Senate ruled that an heir may request a deferral of the claim to a compulsory share if, given the composition of the estate, the fulfilment of the claim in its entirety would constitute an unreasonable hardship for the heir. This is particularly the case where immediate fulfilment of the claim would require the heir to dispose of or sell an asset forming part of the estate which constitutes the heir’s economic basis. When assessing whether undue hardship exists, due regard must be given to the interests of the person entitled to the compulsory share. However, if it is impossible for the heir, as a result of the deferral, to satisfy the claim to the compulsory share by other means, a deferral is not an option.
This decision was based on the following abridged statement of facts:
The testator is the defendant’s grandfather. The claimants are the testator’s daughter, who was 54 at the time of the appeal proceedings, and his son, who was 57; the daughter is the defendant’s mother and the son is therefore her uncle. The testator disinherited his children and appointed the defendant as sole heir. The estate consists mainly of a developed plot of land, which is now used by the defendant and her family as a residence. The claimants are claiming payment from the defendant of their statutory share, amounting to EUR 29,500 each.
The Regional Court ordered the defendant to pay each of the two claimants the statutory share they had claimed. It dismissed the defendant’s application for a deferral of payment of the statutory share. The defendant lodged an appeal against this decision.
The defendant took the view that meeting the claims for a compulsory share would place an unreasonable burden on her, as she was currently living in the house with five children and, for personal reasons, would not be able to obtain a further loan.
It had not been possible to sell the house in order to pay the statutory share claims. Although there had been an offer to buy from Mr and Mrs Sch., it had not been a serious one.
The defendant had to take out a building society loan of EUR 46,000 to make the house habitable. At the time of the inheritance, there was no working heating system or electrical circuit, and there was water damage throughout the house.
The defendant stated that she was, in principle, willing to pay, but could not specify a date on which she would be able to do so. Her husband was unemployed. By 2024, her children would be past the worst of their childhood, meaning she would then have greater opportunities to work. The defendant therefore applied for a deferral of the claims to the compulsory share until 30 June 2024.
The Higher Regional Court held that the defendant’s appeal was unfounded.
According to Section 2331a(1) of the German Civil Code (BGB) The heir may request a deferral of payment of the compulsory share if immediate settlement of the entire claim would constitute an unreasonable hardship for the heir due to the nature of the assets in the estate, in particular if it would force them to give up the family home or to sell an asset which forms the economic basis of the heir’s and their family’s livelihood. Due regard must be given to the interests of the person entitled to the compulsory share. In the present case, the judges held that the claimant’s interest clearly outweighs the defendant’s interest in retaining the family home.
It is true that the family home need not already constitute the basis of the defendant’s livelihood at the time of the opening of the succession. It is also sufficient if this is the case in the future. Therefore, in the present case, the deferral should not be refused solely on the grounds that, in 2014, when her status as an heir was established, the defendant was not yet living in the house but merely intended to do so.
In the present case, however, it should be taken into account, in favour of the claimants, that the defendant had already succeeded in delaying its obligation to make payment by almost five years as a result of the long-running legal dispute.
Furthermore, a deferral is not an option even if it is foreseeable that the heir – in this case, the defendant – will not, even with a deferral, ever be in a position to obtain the funds necessary to satisfy the claim to a compulsory share. This is already supported in the present case by the fact that, during the legal proceedings which have lasted for almost five years, the defendant has failed to satisfy the claims to a compulsory share. Her only sources of income are parental allowance, child benefit and remuneration for part-time employment. The date from which the defendant stated she would be prepared to pay (30 June 2024) was mentioned by her solely because the Court had made it clear that an indefinite deferral of the claims to a compulsory share was out of the question. However, she had not presented any realistic evidence whatsoever to support the conclusion that the defendant would in fact be able to pay at that time.
It was also necessary to take into account, in favour of the claimants, that the defendant had another family home at the time her status as an heir was established (2014). In the view of the Court of Appeal, there was no need to make a house which, according to the defendant’s submission, was still uninhabitable, fit for habitation by means of substantial investment. It was incomprehensible that the defendant should have taken out a building society loan of EUR 46,000 without considering the possibility of first satisfying the plaintiffs’ legitimate claims. Finally, it had to be borne in mind that it was only through these expenditure that the house fell within the scope of protection of the Section 2331a of the German Civil Code (BGB) liked.
As part of the Senate’s balancing of interests, it was also necessary to take into account that the defendant did indeed have the option of selling the house and thereby satisfying the plaintiffs’ claims to a compulsory share. The examination of the Sch. couple as witnesses revealed that they had made a serious offer to purchase the property from the defendant.
Ultimately, the judges also took sufficient account of the plaintiffs’ advanced age. By 30 June 2024, they would already be 59 and 62 years old. The plaintiffs cannot reasonably be expected to defer their claims against the defendant’s need for accommodation in a house that is clearly too large until they reach such an age.
This case demonstrates that, whilst a deferral of claims to a compulsory share is in principle possible, it is subject to certain conditions. Whether these conditions are actually met requires a thorough legal assessment. We would be happy to assist you with this. We are also the right point of contact for all other matters relating to inheritance law. You can contact us by email at willkommen@gwgl-hamburg.de or by telephone on 040/300 39 86-0 there for you.
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