GERMANY Law and Practice Contributed by: Tanja Schienke-Ohletz, Flick Gocke Schaumburg
3. Intestacy and Forced Heirship Laws 3.1 Intestate Succession Legal succession in Germany is governed by the BGB. This applies if the deceased has not left a valid last will and testament. The order in which legal heirs are considered is determined by a specific order provided for in law. The spouse has a special status. They are entitled to inherit alongside relatives and receive a certain share of the estate depending on the matrimonial property regime and the number of other heirs. First-order heirs are the descendants of the deceased – ie, children, grandchildren, etc. A living descend- ant excludes descendants related to them through the deceased from the succession. If children have died, their descendants take their place and enter into the line of succession. Children generally inherit equal shares. Only if there are no descendants – ie, no first-order heirs, do the parents of the deceased and their descendants (siblings, nieces, nephews; second- order heirs) inherit. If there are also no second-order heirs, the grandparents and their descendants (aunts, uncles; third-order heirs) inherit. From the fourth order onwards, the next relatives inherit. In the legal succession, there may be numerous heirs who together form a community of heirs. In such a case, the individual heir cannot dispose of individ- ual items of the estate. It should also be noted that illegitimate children are treated equally to legitimate descendants; adopted children may also be entitled to inherit, whereby a distinction must be made between the adoption of minors and adults. 3.2 Forced Heirship Although German inheritance law is based on the prin- ciple of freedom of testamentary disposition, the right to a compulsory portion must always be taken into account in succession planning. Descendants (chil- dren, grandchildren), the spouse and the parents of the deceased are entitled to a compulsory portion if they have been excluded from succession by a dis- position of property upon death (eg, will). The com-
centre of their life at the time of their death – ie, where the actual centre of their life was in family, social and professional terms. The duration and permanence of the stay, personal integration into the social and family environment, and personal ties are all relevant factors. A mere temporary stay is not sufficient. However, the deceased may choose the law of the country of his or her nationality. The question of the right to a compulsory portion is also determined by the last habitual residence of the deceased, unless he or she has made a choice of law. Jurisdiction for Divorce Law In most cases, the applicable law in a divorce with international implications is governed by Regulation (EU) No 1259/2010 (the “Rome III Regulation”). The spouses may primarily determine the law applica- ble to the divorce. However, they may only choose the nationality of one spouse (the place of the court seised). Otherwise, the following applies: • the law of the country in which the spouses have their habitual residence at the time the court is seised; • the law of the country in which the spouses last had their habitual residence, provided that this did not end more than one year ago and one of the spouses still has their habitual residence there; • the law of the country of which both spouses are nationals; or • the law of the country of the court seised. 2.2 Income Tax Residency Income tax liability for natural persons is also linked to their place of residence or habitual abode in Germany. The terms “place of residence” and “habitual abode” as used in inheritance tax law apply. These criteria are relevant for both types of tax. If someone is liable for income tax, they are also liable for inheritance tax.
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