An inheritance contract is a contract made before a person dies to regulate how their property will be distributed after death. Inheritance contracts can be used to effectively manage a person’s assets after their death.
Rather than leaving these decisions to the courts, they give the testator the freedom to decide how their property should be divided.
An contract can contain a number of different clauses. For example, it can specify who will receive the deceased’s property, how it will be divided, who will administer it and when it will be paid out. It can also restrict who receives the distribution of the property.
Therefore, it must be properly written down and maintained. It is crucial that all parties understand the provisions of the inheritance contract. The inheritance contract must be read and understood by all parties before it is signed.
It is also important to know that a will cannot take the place of legal obligations. However, it can be used as a supplementary instrument to manage the assets and regulate the testator’s demise.
Table of contents
- What is an inheritance contract
- Definition of an inheritance contract
- Advantages of an inheritance contract
- Difference between a contract of inheritance and a will
- Invalid inheritance contracts
- Binding effect of an inheritance contract
- Divorce and inheritance contract
- Amending or contesting an inheritance contract after death
- How are spouses taken into account in an inheritance contract?
- How can a lawyer help with the subject of an inheritance contract?
- What you should know about the inheritance contract
- Relevance of a contractual inheritance arrangement
What is a contract of inheritance
A contract called an inheritance contract governs certain inheritance arrangements between testamentary heirs and other heirs. A testamentary heir or a group of testamentary heirs may enter into such a contract to determine how assets are to be distributed after the death of the testamentary heir.
This contract also specifies how the inheritance is to be distributed, including to which heirs and on what terms. The contract of inheritance may also contain instructions for the administration of the assets and clauses on their use.
It may also contain a number of other clauses, for example on the transfer of certain goods and real estate or on the levying of certain inheritance taxes.
An inheritance contract can also ensure that the assets are not taken away by force or without reason and that they are not divided among the heirs during their lifetime.
Definition: What does a contract of inheritance under the Civil Code mean?
A contract concluded under the German Civil Code (BGB) that regulates the transfer of assets from one person to another is called an inheritance contract. This contract can be concluded both directly between living parties and between testators and their testamentary heirs.
Inheritance contracts can cover a variety of assets, including cash, securities, collections and real estate. The terms and circumstances for the transfer of the assets are set out in the contract, which may also regulate how the assets are distributed among the heirs.
In addition, conditions may be stipulated, e.g. who is to receive certain items from the deceased according to his or her will or what rules the heirs must follow.
The contract may also contain restrictions, e.g. the obligation of the testator to name a certain heir or the prohibition to bequeath certain assets.
In addition, inheritance contracts can ensure that certain assets are not jeopardised by claims or conditions relating to the inheritance. This can be particularly important when it comes to protecting non-inherited assets such as the family business.
The inheritance contract must be reviewed by a qualified lawyer and signed by all parties in order to be enforceable.
Advantages
A pre-contractual instrument, it regulates the heirs who will receive an inheritance after the death of the deceased. It may also set out the procedures to be followed in relation to the deceased’s property after his or her death.
Thanks to several advantages offered by this contract, a person can better manage and protect his or her assets. The first advantage of such a contract is that it gives the heirs precise instructions on how to deal with the assets of the estate.
It can set guidelines for the distribution of the deceased’s assets and the requirements for inheritance. Such a contract can prevent disagreements between the numerous heirs that may arise in this way when distributing the inheritance.
Another advantage is that the distribution of the assets after the deceased’s death is legally guaranteed. The contract can both secure the heirs’ right to the inheritance and establish guidelines for the distribution of the deceased’s assets.
In this way, the heirs can be sure that their share of the inheritance will not pass to another person without their knowledge and consent. Thanks to the contract, the testator can manage his assets as he sees fit, and this is his ultimate advantage.
The contract can specify who is to manage the testator’s assets and how they are to be managed. In this way, the testator can ensure that his or her assets are managed according to his or her wishes even after his or her death.
Overall, an inheritance contract offers many advantages that allow heirs to manage their assets as they see fit while protecting themselves. To ensure that their assets are managed in accordance with their wishes, testators should enter into such a contract.
Difference between a contract of inheritance and a will
The main difference between an inheritance contract and a will is that an inheritance contract is signed before the death of the testator, whereas a will is drawn up after the death of the testator.
A private contract that describes how the testator wishes to manage and divide his or her assets after death is called an inheritance contract. It is concluded between the testator and one or more parties.
In contrast, a will is drawn up after the testator’s death and contains instructions on how his or her property is to be managed and distributed. An inheritance contract and a will also differ in that an inheritance contract does not have to be notarised, whereas a will must be notarised to be enforceable.
Inheritance contracts can only be challenged in court under certain circumstances, e.g. if the testator did not intentionally deceive or defraud. However, a will cannot be contested unless it was made fraudulently or under duress.
Wills and contracts of inheritance both serve to determine the heir of the deceased’s property, but they are very different from each other. Therefore, care must be taken when choosing the appropriate legal instrument.
When is an inheritance contract legally invalid?
As a rule, these contracts must meet certain requirements in order to be legally enforceable.
The inheritance contract may not be enforceable if these conditions are not met. Such a contract may not be legal for a number of reasons. One of these reasons is the inaccuracy or incompleteness of the contract.
For example, it may be void if the parties do not provide all the relevant information or do not complete the relevant paperwork. Such a contract may also be void if the parties do not disclose all relevant financial information to each other.
Before an inheritance contract becomes enforceable, it must be properly completed and comply with the law. The distribution of assets that are the subject of an invalid contract may also be invalid. Therefore, such contracts should always be checked by an experienced lawyer before they are signed.
Binding effect: How can heirs be bound by the agreements?
All heirs are bound to abide by the terms of an inheritance contract if it is legally enforceable.
The nature of the contract concluded between the parties affects the extent to which heirs are bound by the terms of the agreement.
A will is a document written by a deceased person during his or her lifetime. In a will, the testator can specify how his or her assets are to be divided among his or her heirs after his or her death.
Only after the execution of the will does the contract of inheritance come into effect. It is easy to bind the heirs to a will because it is a written document. Such a contract can also be drawn up by a notary. This must then be signed by the testator before the notary.
The contract of inheritance is then recorded in a public register and made legally enforceable. A notarial contract is a very strong and trustworthy method of binding the heirs to the terms of the contract. An informal contract of inheritance can also be concluded.
In this case, the contract must be signed by each individual heir in order for it to be enforceable. However, since the contract is not publicly notarised, it is more difficult to bind the heirs to the terms by an informal contract.
In an contract, the heirs can be obliged to follow certain guidelines and agreements. For example, the contract may stipulate that the heirs must refrain from paying certain inheritance taxes or receive certain assets. Consequently, the provisions of the contract may be binding on the heirs.
In any case, an inheritance contract should be drafted as precisely as possible so that all parties know their obligations and rights. The heirs can be bound by such a contract to comply with the contractual provisions.
How does a divorce affect an inheritance contract?
An inheritance contract may be affected by a divorce. Generally, only spouses can enter into an inheritance contract. If a marriage is divorced, the spouses are no longer obliged to abide by their contract, as it is only valid as long as the marriage exists.
Consequently, the inheritance contract is no longer binding on the spouses after a divorce. For persons who were not married, the contract may still be valid. The contract may be amended in this situation to exclude persons affected by the divorce.
When couples no longer live together, it may occasionally be advantageous to change the inheritance arrangement. For example, it is possible to amend an contract so that one spouse does not inherit more than the other.
In the event of a divorce, the inheritance contract can under certain circumstances be dissolved completely. In order to reorganise their property situation in this case, the spouses must conclude a new contract.
A divorce can affect a couple’s inheritance contract, so it is important that they are informed about it. To ensure that everyone’s rights and interests are protected, they should speak to a lawyer.
Amending or challenging an inheritance contract after death
Sometimes, after a person’s death, heirs have the right to amend or challenge an inheritance contract.
After a person’s death, heirs must apply to the relevant court to amend or challenge an contract. They must give precise reasons why they want to amend or challenge the contract. A contract can be amended or contested after the death of a person for a number of reasons.
For example, an inheritance contract can be challenged if it can be shown that it was drawn up under duress, coercion or omission, or if the proper legal procedure was not followed.
If the circumstances relevant to the contract have changed, it can also be amended. For example, a contract may be amended if an heir has died or the value of the estate has decreased significantly.
In addition, there are some factors that prevent a contract from being amended or contested. Examples of these are: The contract was duly concluded; there are no sufficient grounds for amending or challenging the contract; or the contract was previously confirmed by a court.
Before making an application to amend or challenge an inheritance contract, heirs should speak to a lawyer. The latter can help with the wording of the application and determine whether a challenge or amendment will be successful. He or she can also help clarify the legal implications of amending or challenging the contract.
How are spouses considered in an inheritance contract?
In an inheritance contract, the spouses are usually appointed as co-heirs. As a result, both spouses automatically become co-heirs and receive an equal share of the deceased’s assets.
This rule applies when a person dies without leaving a will or other type of inheritance contract. However, it can also be regulated by a contract who becomes heir after the death of the deceased.
Shares in the inheritance or claims that go to certain persons in the event of the deceased’s death can also be regulated by a contract. Spouses can be designated as different heirs in an inheritance contract.
Accordingly, each spouse acts as an individual heir and is only entitled to the assets of the deceased that were specified in the inheritance contract as being due to him or her. If one spouse receives a larger share of the inheritance than the other, this may result in an unequal distribution of the estate.
The contract of inheritance can also be used to regulate joint assets or other financial arrangements between spouses. With a contract, the spouses can, for example, determine how their assets are to be divided in the event of the death of the testator.
Before one of the spouses dies, they should definitely conclude an contract. This is the only way to ensure that the will of the deceased is implemented and that all spouses are subject to the same obligations.
In order to ensure that the inheritance contract is filled out correctly, a competent lawyer should also be consulted.
How can a lawyer help with the contract?
A lawyer can be of great help when it comes to inheritance contracts. He can help the testators to make a binding agreement that meets the wishes and interests of all parties involved.
A lawyer can help the testators draw up an inheritance contract that sets out all the important details, such as how the inheritance will be distributed, how it may be used and how the beneficiaries will be prepared.
He or she can also help obtain the necessary approvals and comply with all legal standards. A lawyer can also help the testators enforce their rights and assist them with possible disputes about the terms of the contract.
What you should know about the contract of inheritance
1. A contract of inheritance is a written agreement setting out the terms under which a person or persons will acquire property after the death of the testator.
2. To ensure that property is divided the way you want it to be after your death, you should sign an inheritance contract before you die.
3. An contract usually lists the names of the testator and the heirs, the shares each heir will receive and the conditions attached to the inheritance.
4. The heirs have the right to file a lawsuit to force compliance with an inheritance contract if it is not followed.
5. A codicil is a legal document that can be used to amend an inheritance contract. To be enforceable, the codicil must be signed by both parties.
6. A will is a written document in which the testator specifies how his or her property is to be distributed after his or her death.
7. An inheritance contract provides for the disinheritance of heirs.
8.Aninheritance contract is enforceable in court and cannot be broken without legal consequences.
9. Heirs can challenge an inheritance contract in court if they consider it unenforceable, unreasonable or abusive.
10. After the death of the testator, an inheritance contract can no longer be amended or revoked.
Relevance of a contractual inheritance arrangement
The contract of inheritance is an extremely practical and clever technique for regulating succession after the death of a person. It is a document that not only expresses the wishes of the testator, but also takes into account his or her needs and concerns regarding the disposition of his or her property.
Inheritance contracts help to avoid inheritance disputes, which are often expensive and time-consuming. They can also prevent unprepared heirs from being burdened with significant financial obligations.
By specifying certain conditions that an heir must fulfil in order to receive part of the estate, the contract can also help to protect the testator’s assets.
Overall, the contract of inheritance is a very practical and sensible method of regulating succession. When drafting a contract, be sure to seek professional advice to ensure that all provisions are correct and legally binding.
Start working towards financial stability today to secure your family. To settle your estate, you should draw up an inheritance contract immediately. Call us right away to learn more: Herfurtner Law Firm.