German compulsory portion law protects close relatives from complete disinheritance. Learn who is entitled to a compulsory portion, how it is calculated and what planning options estate planning offers.
Compulsory Portion Rights: Claims, Calculation and Planning Options
The freedom of testation is a fundamental principle of German inheritance law. In principle, everyone may freely determine who is to receive their assets after death. However, this freedom has its limits: compulsory portion law secures close relatives a minimum share of the estate – even if they have been excluded from the succession by will or inheritance contract. For entrepreneurs and high-net-worth individuals, compulsory portion law is therefore a central issue in succession planning.
Who Is Entitled to a Compulsory Portion?
The Circle of Entitled Persons
The law grants the compulsory portion to a narrowly defined group of persons (§ 2303 BGB):
- Descendants of the testator (children, grandchildren, great-grandchildren)
- Spouse or registered civil partner
- Parents of the testator (only if no descendants exist)
Not entitled to a compulsory portion are:
- Siblings of the testator
- Grandparents
- Nephews and nieces
- Unregistered life partners
- Stepchildren (unless adopted)
Prerequisite: Disinheritance
The compulsory portion claim only arises if the entitled person has been excluded from the succession by testamentary disposition (will or inheritance contract) (§ 2303 Abs. 1 BGB). If the entitled person is appointed as heir but with a share that is less than the compulsory portion, they have a so-called supplementary compulsory portion claim (§ 2305 BGB).
Calculating the Compulsory Portion
The Basic Formula
The compulsory portion amounts to half of the statutory inheritance share (§ 2303 Abs. 1 BGB). The calculation proceeds in two steps:
Step 1: Determine the statutory inheritance share
The statutory inheritance share depends on the order of succession and the matrimonial property regime. An example: the testator is survived by a wife and two children. Under the community of accrued gains regime, the wife's statutory share is 1/2, and each child receives 1/4.
Step 2: Take half
- Compulsory portion of the wife: 1/2 x 1/2 = 1/4 of the estate value
- Compulsory portion of each child: 1/2 x 1/4 = 1/8 of the estate value
Determining the Estate Value
Calculating the compulsory portion requires determining the estate value at the time of death (§ 2311 BGB). The following applies:
- Assets: All assets of the testator at fair market value (real estate, bank balances, securities, company shares, art, vehicles, etc.)
- Liabilities: Estate liabilities are deducted (debts, funeral costs, estate administration costs)
- Valuation date: The relevant date is the date of death of the testator
Valuation Issues in Practice
Determining the estate value is frequently the central point of contention in compulsory portion law:
- Real estate: Fair market value is regularly determined by expert valuation. The income approach and the cost approach can produce significantly different results
- Company shares: Valuing GmbH shares or partnership interests is complex and frequently disputed. Common methods include the capitalised earnings method and the simplified capitalised earnings method
- Art and collections: Specialised appraisers are required
- Life insurance: Surrender values or insurance benefits may increase the estate value
The Supplementary Compulsory Portion Claim
Lifetime Gifts (§ 2325 BGB)
A particularly important instrument in practice is the supplementary compulsory portion claim. It prevents the testator from undermining the compulsory portion through lifetime gifts.
Basic principle: Gifts made by the testator to third parties are notionally added back to the estate, provided they were made within the last ten years before the date of death.
The 10-Year Diminishing Rule
The inclusion of the gift is graduated (so-called pro rata solution, § 2325 Abs. 3 BGB):
- In the 1st year before death: the gift is included at 100 %
- In the 2nd year: at 90 %
- In the 3rd year: at 80 %
- And so on, until in the 10th year the gift is included at only 10 %
- After 10 years: no inclusion
Important Exceptions to the 10-Year Rule
Note: For gifts to the spouse, the 10-year period does not begin to run until the marriage is dissolved (§ 2325 Abs. 3 Satz 3 BGB). This means: gifts between spouses are subject to the supplementary claim in full until death or divorce – regardless of how long ago they were made.
Equally problematic are gifts with reserved rights of use (e.g., usufruct over a gifted property). According to the settled case law of the BGH, the 10-year period does not begin to run in such cases as long as the testator retains the economic benefit.
Disinheritance and Deprivation of the Compulsory Portion
Disinheritance
Disinheritance is the simplest way to exclude a relative from the succession. However, it merely results in the person not becoming an heir – the compulsory portion claim remains.
Deprivation of the Compulsory Portion (§ 2333 BGB)
Complete deprivation of the compulsory portion is only possible in narrowly defined exceptional cases. The law exhaustively lists the following grounds:
- The entitled person has attempted to take the life of the testator, their spouse or a close relative
- They have committed a serious intentional criminal offence against the testator
- They have maliciously violated their statutory maintenance obligation towards the testator
- They have been finally convicted of an intentional criminal offence to a prison sentence of at least one year without probation
The deprivation of the compulsory portion must be expressly ordered and justified in the will. The ground for deprivation must have existed at the time the will was drawn up.
Planning Options in Estate Planning
Waiver of Compulsory Portion
A waiver of the compulsory portion (§ 2346 Abs. 2 BGB) is the most effective instrument for excluding compulsory portion claims. It requires:
- A notarially certified contract between the testator and the entitled person
- As a rule, consideration (settlement payment, gift, maintenance commitment)
- The voluntary participation of the entitled person
Practical tip: Waivers of the compulsory portion are frequently agreed in the context of anticipated succession. When a child receives a property or company share during the testator's lifetime, the waiver of the compulsory portion can be declared in return.
Lifetime Gifts with Diminishing Effect
Through early gifts, the estate value – and thus the basis for calculating the compulsory portion – can be reduced. Thanks to the 10-year diminishing rule under § 2325 Abs. 3 BGB, the supplementary claim decreases with each passing year. However, it should be noted that:
- For gifts to spouses, the diminishing rule does not apply
- For gifts with reserved rights of use, the period may not begin to run
- Tax allowances (§ 16 ErbStG) should be utilised in parallel
Matrimonial Property Regime Switch
The so-called matrimonial property regime switch is a legitimate planning instrument: spouses switch from the statutory matrimonial property regime of community of accrued gains to separation of property and then back again. The resulting accrued gains equalisation claim is exempt from gift tax and reduces the estate.
Joint Will (Berliner Testament) and Compulsory Portion
The Berliner Testament (§ 2269 BGB), in which spouses appoint each other as sole heirs and the children as final heirs, virtually provokes compulsory portion claims: upon the death of the first spouse, the children are disinherited and can assert their compulsory portion.
Planning options:
- Compulsory portion penalty clause: Anyone who claims the compulsory portion after the first death also receives only the compulsory portion after the second death. This clause has a deterrent effect but cannot stop a determined entitled person
- Jastrow clause: Children who do not assert the compulsory portion after the first death receive a legacy as a reward upon the second death
- Combination with waiver of compulsory portion: The safest solution is to have the children's waiver of the compulsory portion notarially certified
Enforcement and Limitation
The Compulsory Portion as a Monetary Claim
The compulsory portion is a pure monetary claim (§ 2303 Abs. 1 BGB). The entitled person has no claim to specific estate assets but only to payment of a sum of money. The claim is directed against the heir.
Right to Information
To calculate the compulsory portion, the entitled person has a comprehensive right to information against the heir (§ 2314 BGB):
- Submission of an estate inventory
- Valuation by experts at the expense of the estate
- Information on lifetime gifts (for the supplementary claim)
- Right to a notarial estate inventory
Limitation
The compulsory portion claim is subject to a limitation period of three years from knowledge of the death and the disinheritance (§§ 195, 199 BGB). The absolute limitation period is 30 years from the date of death.
Conclusion
Compulsory portion law is a complex area of law that must be considered early in estate planning. Anyone wishing to minimise compulsory portion claims should not wait until the estate arises but should set the right course during their lifetime – through waivers of the compulsory portion, strategic gifts and well-considered will drafting. Close coordination between inheritance law and tax advisory is essential.
At compleneo, we combine legal and tax expertise under one roof. We support you in structuring your succession – from the initial assessment through contract drafting to implementation. Arrange a confidential initial consultation to discuss your individual situation.
