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The death of a close relative one is not only associated with mourning, but also with the need to sort out property matters. The situation becomes particularly complicated if the deceased was a German citizen or had their last residence in Germany. In this case, the provisions of German succession law apply. Here is an overview of the available options for protecting the heir against liability for succession debts.

1. Rejection of inheritance (Ausschlagung der Erbschaft; Odrzucenie spadku)

Premise of application: The heir in Poland may reject the inheritance within 6 months of becoming aware of the appointment to the inheritance if the deceased last resided abroad or the heir resides abroad (e.g. in Poland).

If you live in Germany, the time limit is reduced to 6 weeks!

A characteristic feature of this institution is the complete exclusion of the heir from the inheritance – he is treated as if he were not related to the deceased person. As a result, he is not liable for the debts of the deceased.

Note 1: The inheritance can be rejected in Germany before a notary or a court, but if you live in Poland or in another country, you can reject the inheritance according to the law of that country (e.g. in Poland before a notary or a court).

Note 2: Polish succession law also provides for a possibility to reject the inheritance but the deadline is uniform for both inland and abroad succesions and amounts to 6 months.

2. Inheritance Estate Insolvency (Nachlassinsolvenz)

Premise of application: An heir may file an application for insolvency proceedings if the assets of the estate are insufficient to cover the liabilities. This application can be filed with the court instead of an application for the appointment of a trustee of the estate or on found execution during the trusteeship (§§ 1975, 1980 of the Geman Civil Code, hereinafter referred to as BGB; §§ 315-331 of the German Insolvency Law, hereinafter referred to as  InsO). This is a sub-type of insolvency proceedings, so it requires you to disclose full details of the estate’s assets and debts.

A distinctive feature is the protection of the heir’s personal assets – once the proceedings are opened, creditors are satisfied exclusively from the estate.

Note: There is no equivalent institution in Poland. The difference is that in Poland, if you do not declare whether you accept the inheritance or not, your liability will be limited to the value of the assets – the debts are reduced proportionally to the value of the estate’s assets. It is worth remembering that, to fully benefit from the statutory limitation of debts, you need to draw up an inventory of the estate or have one drawn up by a bailiff.

3. Deceased Estate’s Trusteeship (Nachlassverwaltung; Kuratela spadku)

Premise of application: An application for the appointment of a trustee of the estate may be made by an heir if there is a threat to the estate’s assets. In particular, where the succession assets are insufficient to cover debts. The trustee administers the succession in the interests of both the creditors and the heir himself.

 A characteristic feature of this institution is the exclusion of the liability of the heir – debts can only be satisfied from the assets managed by the trustee, not from the personal assets of the heir (§ 1975 BGB).

Note: it is very similar to the situation in Poland. The problem is that there is problem in disposing of real estates as done by the trustee – it is legal only if the court agrees on that and we cannot foresee whether the court accepts the purchase or not.

4. The plea of poverty of the estate (Dürftigkeitseinrede)

Premise of application: If it is impracticable to appoint a trustee of the estate or to initiate insolvency proceedings due to lack of funds (so-called poverty of the estate), or if the trustee’s guardianship has been terminated or the insolvency proceedings discontinued for this reason, the heir can raise the plea of poverty of the estate (§ 1990 Abs. 1 BGB, § 780 ZPO).

A characteristic feature of this institution is that it allows the personal liability for the debts of the estate to be discharged once the formal procedures have been exhausted.

Note: such a plea does not exist in Poland because inheritance is accepted with a statutory reduction of debts, and heirs or trustees are required to draw up an inventory of the estate, and on the basis of that inventory the heirs may reduce they liability.

5. Plea of exhaustion of the estate (Erschöpfungseinrede)

Premise of application: The heir is entitled to this plea after the insolvency proceedings of the estate have been concluded, if these proceedings have ended with the cashing in of all the assets of the estate and their distribution by means of a distribution plan. In such a case, pursuant to the corresponding application of § 1973 BGB, the further liability of the heir is excluded (§ 1989 BGB).

A characteristic feature is that the exclusion of liability is linked to the formal and complete termination of the insolvency proceedings – only after the inherited assets have been monetised and distributed in accordance with the law is the heir not liable for further claims.

Please note that such a plea does not exist in Poland, as there are no insolvency proceedings regarding the estate of the deceased.

Summary

German succession law provides heirs with a number of instruments to protect them from liability for succession debts – from a simple rejection of the inheritance to more complex procedures such as trusteeship or insolvency proceedings. It is crucial to act quickly and consciously – a lack of initiative can lead to personal liability for other people’s debts – in Germany, the inheritance is automatically, i.e. by silence, accepted only outright. In Poland, it is less risky to leave the matter untouched due to the statutory limitation of debts, but caution is still required (have you drawn up an inventory of the estate?).  To prevent the personal liability for debts from happening, formal steps must be taken, but above all consider one of the above. It is therefore advisable to consult a lawyer familiar with both German and Polish inheritance law.