Help! I am in a community of heirs!
If several people become heirs, they initially own the entire estate jointly. All heirs form what is known as a community of heirs. The handling and settlement of communities of heirs often raises questions. Notaries provide support and advice in advance on how to prevent non-functional communities of heirs.
Inheritance without action
When a person dies, it is difficult for relatives to think about the legal consequences: Under German law, all of the deceased's assets - the estate - pass to the heirs appointed on the basis of a will, inheritance contract or statutory succession. This happens automatically; the heirs do not need to cooperate. However, they can disclaim the inheritance within the disclaimer period (usually six weeks).[1]
All heirs must cooperate
Several heirs hold the entire estate together as a community of heirs. The most important consequence of this is that they can only dispose of estate assets jointly. "If a car or property is to be sold, all heirs must participate," explains Dr. Markus Baschnagel, Managing Director of the Baden-Württemberg Chamber of Notaries. This can lead to practical difficulties because not all co-heirs are always able or willing to participate in the administration or settlement of the estate. "There are many reasons for this, for example individual co-heirs may live abroad, not have full legal capacity or there may simply be differences of opinion. The community of heirs is therefore usually not suitable for holding the estate for the long term," concludes Baschnagel. However, precautions can be taken to prevent such non-functional communities of heirs: Notaries can advise on this when drafting wills and inheritance contracts.
Confrontation - even without a dispute
Communities of heirs can be dissolved in various ways:
- The heirs can agree on the division of the estate and regulate this by means of a contract, the so-called distribution of the estate. If there is real estate or shares in a limited liability company in the estate, a notarial deed is required. Compensation payments can also be agreed within this framework. The advantage: "If a property belonging to the estate is transferred to a co-heir, there is no real estate transfer tax," says Baschnagel.
- An heir can transfer his or her share in the community of heirs to a co-heir or to a third party. If an heir wishes to sell their share of the estate to a third party, the other co-heirs have a right of first refusal. If one person combines all inheritance shares, they are entitled to the entire estate. Transfers of inheritance shares also require notarization.
- Things can become more complicated if no agreement can be reached on the division of the estate. It is possible to apply for probate mediation proceedings before a notary. "However, such proceedings involve a great deal of effort and are rarely successful," reports Baschnagel. It is therefore more common for the co-heirs to resort to the sharpest sword and apply for a partition auction, in which the estate assets, especially real estate, are auctioned off in court. "However, this is usually the worst solution, as a better price can often be achieved in a private sale," explains Baschnagel.
Notarial assistance with the transaction
Notaries clarify legal pitfalls, ensure legally secure arrangements and thus make it easier for heirs to settle their community of heirs. Notarial advice not only helps to dissolve existing communities of heirs, but can also prevent conflicts. "Anyone who draws up a will or contract of inheritance at an early stage can specifically prevent the creation of a non-functional community of heirs," explains Baschnagel. "Those who make provisions often spare their loved ones complicated and emotional disputes," concludes Baschnagel.
[1] Our press release from September 2024, available at
https://medienverbund-notarkammern.de/wp-content/uploads/2024/10/Pressemitteilung-2024-9-Karras.pdf