- Contract of Inheritance and Its Consequences
- June 18, 2015 | Author: Michael Rainer
- Law Firm: GRP Rainer LLP - Cologne Office
One’s final will need not necessarily be drawn up in a testament. A contract of inheritance is also a possibility. That being said, it is difficult to subsequently alter a contract of inheritance.
GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: If no testament or contract of inheritance exists, intestate succession automatically kicks in. Those with a different conception of how their estate should be distributed ought to prepare a testament or a contract of inheritance.
Testaments and contracts of inheritance differ in a few aspects quite substantially. Unlike a testament, a contract of inheritance must be certified by a notary. Since several persons are involved in the case of a contract of inheritance, the arrangements therein are binding. As in the case of other contracts, the contracting parties undertake reciprocal commitments. It is thus not possible for a contract of inheritance to be unilaterally altered at a later date, even if the testator wishes to arrange his estate completely differently in the meantime.
Example: A father of two children appoints a child as the sole heir in a contract of inheritance. Even if years later the father changes his mind and wants both children to be equally entitled to the inheritance, he can no longer unilaterally alter the contract of inheritance. The same disposition would have been straightforward in a testament, but a contract of inheritance restricts the testator’s testamentary freedom. A contract of inheritance can nonetheless have certain advantages, as the contractual partner also makes commitments, e.g. to care for the testator.
The contracting parties ought to carefully consider before signing a contract of inheritance whether they wish to enter into commitments, because it is all but impossible to withdraw from a contract of inheritance unless a right of withdrawal was agreed or in the event of serious misconduct. Otherwise, the only option is to contest the contract of inheritance. It is then normally for the courts to rule on the matter.
In order to prevent it coming to that in the first place, lawyers experienced in the field of succession law should be consulted when a contract of inheritance is involved. They can advise on how the contents of the contract ought to be structured and what consequences this will give rise to. This is the safer option for all contracting parties.