Who inherits without a will, and what a will changes

A master electrician dies at 58 without a will. He leaves his wife, whom he married without a marriage contract, two adult children and a business with its workshop site worth 800,000 €. The widow assumes everything is now hers. In fact she inherits half, each child inherits a quarter, and every decision about every machine now needs three people.

On death, everything passes at once

German succession law starts from a principle that reaches further for business owners than it sounds. Under section 1922 of the Civil Code (BGB), the estate passes as a whole to the heir or heirs at the moment of death. There is no intermediate stage, no piece-by-piece handover and no moment when the estate belongs to nobody.

As a whole also means with its debts. Section 1967 BGB makes the heir liable for the estate's liabilities, and it expressly counts claims arising from compulsory portions and legacies among them. Whoever inherits takes over not just the workshop and the account but the loan, unpaid supplier invoices and the claims of disinherited relatives.

For the business, the machines, receivables and contracts of a sole trader fall straight into the estate. For a GmbH, it is the share. Section 15(1) of the GmbH Act states that shares can be inherited. The company itself does not end with the death, but its shares change owner.

Who receives the shares is first a question of succession law. The articles of association may attach their own consequences to a shareholder's death; this course leaves those company-law questions aside. They do not answer the prior question of who the heir is. There are exactly two routes to that answer: statutory succession or a disposition upon death.

Section 1937 BGB lets the deceased name the heir by will. Without one, the statute applies a fixed ranking. Knowing that ranking pays off even for someone about to write a will: it shows what would happen without one, and therefore what the will is meant to change.

The orders: whoever comes first shuts out the rest

The Code sorts relatives into orders. Heirs of the first order under section 1924 BGB are the descendants: children, grandchildren, great-grandchildren. The second order under section 1925 BGB is the parents and their descendants, so siblings, nieces and nephews. The third order under section 1926 BGB is the grandparents and their descendants.

The decisive rule is section 1930 BGB: a relative is not called to inherit as long as a relative of an earlier order exists. If a single child survives, neither the parents nor the siblings of the deceased receive anything. The orders do not sit side by side; each one displaces the next.

Three rules apply inside the first order. Children inherit in equal shares. A living child excludes his or her own children, so a grandchild does not inherit alongside a parent. And where a child died before the deceased, that child's descendants step into the vacant place. The Code calls this succession by lines of descent.

Each line receives the share the missing child would have received and divides it internally by the same rules. Two grandchildren of a predeceased son split his share; they do not each receive a full child's share. Many children in one line do not enlarge that line, they only make the portions within it smaller.

In the second order, the parents inherit alone and equally if both are alive. If one parent has died, that parent's descendants take the place, meaning the brothers, sisters or half-siblings of the deceased. Without such descendants, the surviving parent inherits alone. The third order follows the same pattern with the pairs of grandparents.

The spouse inherits beside the relatives, not after them

The surviving spouse is not a relative and so stands outside the orders. Section 1931(1) BGB calls the spouse beside the relatives: next to the first order for one quarter, next to the second order or grandparents for one half. With no relatives of the first or second order and no grandparents, the spouse takes everything under subsection 2.

Those fractions are only the starting point, because section 1931(3) BGB leaves section 1371 BGB expressly untouched. This is where the marital property regime comes in. Under section 1363 BGB spouses live in the community of accrued gains unless a marriage contract provides otherwise. Anyone who never signed such a contract lives under this regime.

When the community of accrued gains ends by death, section 1371(1) BGB raises the survivor's statutory share by one quarter of the estate. The provision stresses that it is irrelevant whether the couple actually built up any gains in their case. The extra quarter is a flat allowance, not a reckoning.

Next to children, a spouse under this regime therefore inherits a quarter plus a quarter, one half in total; the children share the other half. Next to the parents or siblings of the deceased, the spouse inherits one half plus a quarter, three quarters. For most married business owners this is what happens without a will.

The extra quarter carries a duty. If the deceased leaves children entitled to inherit who were not born of this marriage, section 1371(4) BGB obliges the survivor, as far as they are in need, to fund an appropriate education for them out of that quarter. Blended families should know this.

Separation of property works differently. Where one or two children inherit beside the spouse, section 1931(4) BGB gives the spouse and each child equal shares: one half each with one child, one third each with two. From three children the basic quarter applies, with no increase, since there is no equalisation of gains.

On top of the share comes the preferential right under section 1932 BGB. Next to second-order relatives or grandparents, the spouse also receives the household items and the wedding presents. Next to children, only as far as they are needed for a reasonable household. Section 10 of the Civil Partnership Act gives registered partners matching rules.

Anyone living with a partner outside marriage or a registered partnership should know one thing: statutory succession only recognises relatives, spouses and registered partners. A cohabiting partner inherits nothing without a will, even after decades of shared life and shared work in the business.

The community of heirs: why the default is risky for a business

The statutory default for a married business owner with children nearly always produces several heirs. Section 2032 BGB then turns the estate into joint property. The business does not belong half to the widow and half to the children as separate pieces; it belongs to all of them together until they divide it.

Until then the co-heirs manage the estate jointly. How they decide in detail is governed by sections 2033 to 2041 BGB, which this course does not explore. In practice, whoever wants to run the business needs the others, and the others often have plans of their own, such as preferring cash to a stake.

Section 2042 BGB hands each co-heir the strongest lever: any of them may demand the division of the estate at any time, unless the law exceptionally defers it. A child with no interest in the business can therefore force a split. If the business cannot be cut into pieces, a sale is often what remains.

That is why statutory succession rarely suits business owners. It distributes by kinship and fraction, not by ability or interest. Whoever wants one particular person to take over must order it personally. The tool for that is the will, and its validity turns on a few strict formal rules.

The will: made in person, in one of two forms

A will can only be made in person, says section 2064 BGB. There is no representation, not even under a general power of attorney. Section 2065 BGB adds that the deceased may not leave it to someone else whether the disposition applies, who benefits or which asset is given.

Under section 2229 BGB a person can make a will once they have turned 16, without parental consent. Someone who, because of a pathological mental disorder, mental deficiency or disturbed consciousness, cannot grasp what the declaration means and act on that insight cannot make one. Whoever fears later doubts should make the will early.

Section 2231 BGB offers two ordinary forms. The first is the public will recorded by a notary. Under section 2232 BGB the testator states the last will to the notary or hands over a document declaring that it contains it. The testator need not have written that document personally.

The second form is the handwritten will under section 2247 BGB. It must be written entirely by the testator's own hand and signed. A text typed on a computer and signed by hand does not meet this form, because the hand of the testator did not write it. If the prescribed form is missing, statutory succession applies.

The testator should state time and place: day, month, year and where it was written. The word should is deliberate. Without these details the will remains valid as long as the necessary facts can be established otherwise. Anyone leaving several wills, though, makes the date the decisive proof of which one applies.

The signature should contain first name and surname. Another form of signature suffices if it shows authorship and a serious intention. Minors and people who cannot read writing may not make a handwritten will; the notary remains open to them.

A handwritten will costs nothing but has two weaknesses. It can be lost or suppressed, and it does not prove the succession everywhere without more. Section 2248 BGB answers the first: at the testator's request it is taken into special official custody. The second weakness is addressed in the next module, under the certificate of inheritance.

Whoever finds a will after the death that was not in official custody must hand it to the probate court without delay under section 2259 BGB. The court opens it under section 348 of the Family Proceedings Act (FamFG) and records the opening. Keeping a will in the drawer because its content is unwelcome is not a permitted choice.

Section 2087 BGB helps with content. Giving the estate or a fraction of it appoints an heir, even without the word heir. Giving only individual assets does not, in case of doubt, make the recipient an heir. Leaving a daughter only the company property therefore calls for saying expressly whether she is to be an heir.

Where a will allows several readings, section 2084 BGB prefers, in case of doubt, the one under which it can take effect. Under section 1938 BGB one can also simply disinherit without appointing anyone. And a will can be revoked: by destroying it under section 2255 BGB or by a later, conflicting will under section 2258 BGB.

The Berlin will in outline

Under section 2265 BGB only spouses can make a joint will, and section 10(4) of the Civil Partnership Act extends that to registered partners. For the handwritten form, section 2267 BGB is satisfied if one spouse writes the will as section 2247 BGB requires and the other signs the joint declaration by hand, ideally adding time and place.

The best-known arrangement is the Berlin will: the spouses appoint each other as heirs and provide that, after the survivor's death, the whole estate goes to a third party, usually the children. Under section 2269 BGB that third party is, in case of doubt, the heir of the spouse who dies last, for the entire estate.

So the children receive nothing on the first death. That is intended, but it has two consequences. The first is being bound. Dispositions the spouses made with regard to each other are mutually dependent under section 2270 BGB: if one is void or revoked, the other becomes ineffective too.

Where the spouses appoint each other, the Code presumes such mutual dependence in case of doubt. While both are alive, neither can simply cancel a mutually dependent disposition by a new will under section 2271 BGB; revocation follows the stricter rule for withdrawing from an inheritance contract.

The right of revocation lapses when the other spouse dies. The survivor can then cancel his or her own disposition only by disclaiming what was received. A widowed business owner often can no longer rearrange the succession freely, for example if it later turns out that only one child wants to take over.

Couples should therefore think about such later wishes when writing the joint will. The second consequence is the compulsory portion: the children are disinherited on the first death and can claim it from the surviving parent. How large it is and which deadlines apply is the subject of the next module.