The Compulsory Share Claim -- Calculation, Enforcement and Planning

The Compulsory Share Claim: Calculation, Enforcement and Planning

German inheritance law grants the testator extensive freedom of testation -- in principle, they may freely determine who receives their assets upon death. This freedom finds, however, a significant limit in the compulsory share provisions of sections 2303 et seq. BGB. Close relatives excluded from the succession by will or inheritance contract are entitled to a minimum share of the estate in the form of a monetary claim against the heirs. The compulsory share claim is among the most conflict-prone topics in inheritance law and requires sound legal knowledge both for estate planning and for enforcement.

Entitlement: Who Has a Claim?

The Circle of Entitled Persons

The law restricts the circle of compulsory share claimants to a narrowly defined group (section 2303 BGB):

• Descendants of the testator (children, grandchildren, great-grandchildren): Legitimate, illegitimate and adopted children have equal status. Grandchildren and further descendants are only entitled if their parent who is more closely related to the testator has ceased to exist (e.g. through predeceasing or their own renunciation of inheritance).
• Spouses and registered civil partners of the testator
• Parents of the testator: Only where there are no descendants

Not entitled are siblings, grandparents, uncles, aunts, nieces, nephews and more distant relatives. The unmarried partner also has no compulsory share claim -- a common misconception in practice.

Requirements

The compulsory share claim arises where the entitled person has been excluded from the succession by a testamentary disposition (will or inheritance contract) or has been allocated a share smaller than the compulsory share (section 2305 BGB). Encumbering the share with restrictions (subsequent succession, testamentary execution, partition instructions) or burdens (legacies, conditions) may also trigger a residual compulsory share claim (section 2306 BGB).

Calculating the Compulsory Share

The Compulsory Share Quota

The compulsory share amounts to one half of the value of the statutory share (section 2303(1) sentence 2 BGB). Calculating the quota therefore first requires determining the statutory share:

Example 1: The testator leaves a wife (community of accrued gains) and two children. He has appointed his wife as sole heir and disinherited the children.

• Statutory share of the children: 1/4 each
• Compulsory share: 1/8 each of the estate value

Example 2: The testator leaves only one child and appoints a friend as sole heir.

• Statutory share of the child: 1/1
• Compulsory share: 1/2 of the estate value

Determining the Estate Value

In practice, determining the estate value is frequently the most contentious issue. The relevant measure is the fair market value of all estate assets at the time of death (section 2311 BGB):

Assets:

• Real estate: Market value, determined by expert report or recognised valuation methods
• Bank balances: Account balance on the date of death including accrued interest
• Securities: Market value on the date of death
• Business interests: Enterprise value using recognised methods (income approach, DCF method)
• Movable property: Vehicles, jewellery, art, collections -- each at market value
• Receivables: Loan claims, tax refund entitlements etc.

Liabilities:

• Testator's debts: Liabilities existing during the testator's lifetime
• Estate debts: Funeral costs, estate administration costs, inheritance tax
• Not deductible: Legacies and conditions do not reduce the compulsory share (section 2311(1) sentence 2 BGB)

The Information Claim (Section 2314 BGB)

The compulsory share claimant has a comprehensive right to information against the heir, encompassing:

• Inventory: The heir must prepare an ordered inventory of all estate assets and liabilities
• Notarial inventory: The claimant may demand that the inventory be prepared by a notary (section 2314(1) sentence 3 BGB)
• Valuation: The claimant may demand that expert valuations be obtained at the estate's expense
• Affidavit: Where doubts exist as to completeness, the claimant may demand a statutory declaration

Supplementary Compulsory Share for Gifts (Sections 2325 et seq. BGB)

Rationale

The supplementary compulsory share is one of the most powerful instruments of compulsory share law. It prevents the testator from depleting their estate during their lifetime through gifts to third parties, thereby hollowing out the compulsory share. In principle, all gifts made by the testator within the last ten years before death are fictionally added to the estate value (section 2325(1) BGB).

The Tapering Model

Since the inheritance law reform of 2010, the tapering model applies (section 2325(3) BGB):

• In the first year before death, the gift is taken into account at 100 per cent
• In each subsequent year, the amount decreases by 10 per cent
• After ten years, the gift is no longer taken into account

Special Rule for Spouses

An important exception applies to gifts to the spouse: the ten-year period only begins to run upon dissolution of the marriage (through death, divorce or annulment). Gifts between spouses are therefore regularly taken into account in full upon death.

Commencement of the Period Where Rights Are Reserved

The running of the ten-year period is suspended where the testator reserves significant rights over the gifted asset. According to BGH case law, the period does not begin to run in particular where:

• Usufruct is reserved: The testator retains the usufruct over the gifted property
• Right of residence: A lifelong right of residence similarly prevents the period from commencing
• Comprehensive restrictions on disposal: Where the donor continues to derive the essential benefits

Disinheritance and Deprivation of the Compulsory Share

Disinheritance by Will

Disinheritance (section 1938 BGB) excludes the affected person from the succession but leaves the compulsory share claim untouched.

Deprivation of the Compulsory Share (Section 2333 BGB)

Complete deprivation of the compulsory share is possible only in narrow exceptional cases. The statutory grounds include:

• The claimant has attempted the life of the testator, their spouse, a descendant or a similarly close person
• The claimant is guilty of a serious intentional criminal offence against one of these persons
• The claimant has maliciously violated their statutory maintenance obligation towards the testator
• The claimant has been finally convicted of an intentional criminal offence and sentenced to at least one year's imprisonment without probation, making their participation in the estate unconscionable

Waiver of the Compulsory Share (Section 2346 BGB)

A frequently chosen structure is the compulsory share waiver by notarial contract between the testator and the entitled person. The waiving party relinquishes their compulsory share claim, typically receiving compensation in return. This offers legal certainty, liquidity protection for the estate and flexibility in structuring the compensation.

Enforcing the Compulsory Share Claim

Out-of-Court Assertion

Enforcement follows a staged model in practice:

• Stage 1: Assertion of the information claim -- requesting an estate inventory
• Stage 2: Demand for a notarial inventory and expert valuations
• Stage 3: Calculation of the compulsory share and payment demand
• Stage 4: If necessary, affidavit where completeness is doubted

Judicial Enforcement: The Staged Action

Where out-of-court settlement fails, the staged action (section 254 ZPO) is the instrument of choice. In a single set of proceedings, claims for information, valuation, affidavit and payment are asserted sequentially. The advantage is that the claimant need not quantify their claim precisely at the outset.

Limitation

The compulsory share claim is subject to a limitation period of three years from the point at which the claimant gains knowledge of the death and the prejudicial disposition (section 2332(1) BGB). The knowledge-independent limitation period is 30 years from the date of death.

Planning Options for Testators

The Berlin Will and Its Compulsory Share Trap

The widely used Berlin will (section 2269 BGB), in which spouses appoint each other as sole heirs and the children as final heirs, harbours a frequently underestimated compulsory share risk: upon the death of the first spouse, the children may assert their compulsory share against the surviving spouse. Protective measures include:

• Compulsory share penalty clause: Children who claim the compulsory share upon the first death are also disinherited upon the second
• Compulsory share waiver agreement: The children waive their compulsory share upon the first death by notarial deed
• Jastrow clause: Legacies are structured to reduce the compulsory share of claiming children upon the second death

Lifetime Asset Transfers

Targeted lifetime transfers are a commonly used instrument to reduce the compulsory share:

• Gifts with tapering: Transfers made more than ten years before death are disregarded for compulsory share purposes
• Moral obligation gifts: Gifts corresponding to a moral duty are exempt from the supplementary compulsory share (section 2330 BGB)
• Corporate structures: Transferring assets into a family partnership may reduce the compulsory share value through discounts for illiquidity and minority interests

Deferral of the Compulsory Share (Section 2331a BGB)

Where the heir is unable to satisfy the compulsory share immediately, they may under certain conditions demand a deferral, particularly where immediate payment would cause undue hardship or where the estate consists predominantly of a business or a family home.

Conclusion

The compulsory share claim is a central element of German inheritance law, balancing freedom of testation against the family's ties to assets. For testators, this means that estate planning must always factor in the compulsory share -- whether through skilful structuring, waiver agreements or lifetime transfers. For those entitled, it is crucial to assert claims in good time and to enforce the comprehensive right to information consistently. The compleneo team advises you on both sides of compulsory share law -- in estate planning as well as in the assertion or defence of compulsory share claims. With our expertise in inheritance law, tax law and corporate law, we develop tailored solutions that optimally safeguard your interests.