If the deceased last lived in Spain, left a holiday home in France or the heirs themselves live abroad, estate insolvency with a foreign element raises additional questions: Which court has jurisdiction? Do the foreign assets form part of the insolvency estate? How do foreign creditors file their claims? And how do heirs protect their own assets?
This article explains German estate insolvency proceedings (Nachlassinsolvenzverfahren) under Sections 315 et seq. of the Insolvency Code (Insolvenzordnung, InsO), the duty to file under Section 1980 of the German Civil Code (Bürgerliches Gesetzbuch, BGB), the limitation of liability under Section 1975 BGB and the plea of insufficiency of the estate (Dürftigkeitseinrede) under Section 1990 BGB in conjunction with the European Insolvency Regulation (Regulation (EU) 2015/848, EuInsVO) and the European Succession Regulation (Regulation (EU) No 650/2012, EuErbVO). Which succession law applies is covered in the article International succession law when emigrating. Legal position: October 2026.
What Are Estate Insolvency Proceedings?
Estate insolvency proceedings are special insolvency proceedings over the estate as a separate pool of assets. They are intended to satisfy the estate creditors collectively according to fixed rules of ranking and to enable the heir to limit his liability. Under Section 1967 BGB, the heir is initially liable for all estate liabilities, that is, for the debts of the deceased and for compulsory portions, legacies and testamentary burdens, and in principle also with his own assets.
Once estate insolvency proceedings have been opened or estate administration (Nachlassverwaltung) has been ordered, liability is limited to the estate under Section 1975 BGB. For tax debts of the deceased, Section 45 (2) of the Fiscal Code (Abgabenordnung, AO) refers to these civil law liability rules; the tax office is therefore usually one estate creditor among many.
Overview of the Key Rules in Sections 315 et seq. InsO
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| Rule | Content | Provision |
|---|---|---|
| Local jurisdiction | Insolvency court at the general place of jurisdiction of the deceased at the time of death; in the case of self-employed economic activity, at the place where it was centred | Section 315 InsO |
| Admissibility | Opening also before acceptance of the inheritance, also where the heir has unlimited liability, and with several heirs also after partition; no proceedings over a single share in the inheritance | Section 316 InsO |
| Persons entitled to apply | every heir, estate administrator, other estate curator, executor with administrative powers, every estate creditor | Section 317 InsO |
| Deadline for creditors | creditor’s application inadmissible once two years have passed since acceptance of the inheritance | Section 319 InsO |
| Grounds for opening | insolvency and over-indebtedness; where the application is made by the heir, estate administrator, estate curator or executor, also imminent insolvency | Section 320 InsO |
| Enforcement after the death | enforcement measures against the estate after the death do not confer a right to separate satisfaction | Section 321 InsO |
| Liabilities of the estate | among others, funeral costs, costs of an estate curatorship, reimbursement of the heir’s expenses | Section 324 InsO |
| Subordination | compulsory portion claims, then legacies and testamentary burdens only after the other creditors | Section 327 InsO |
If not all heirs file the application, the ground for opening must be substantiated (Section 317 (2) InsO). Where co-heirs live in different countries, a single co-heir can therefore file the application without depending on the others.
The Heir’s Duty to File under Section 1980 BGB
There is no fixed deadline in weeks for heirs as there is for managing directors of a GmbH. Section 1980 (1) BGB does, however, require the heir to apply for the opening of proceedings “without undue delay” as soon as he becomes aware of the insolvency or over-indebtedness of the estate. If he breaches this duty, he is liable to the creditors for the resulting damage. Liabilities arising from legacies and testamentary burdens are disregarded when determining whether the estate is sufficient (Section 1980 (1) sentence 3 BGB); Section 1992 BGB applies to them instead.
Section 1980 (2) BGB is central for cases with a foreign element: negligent ignorance is equivalent to knowledge. In particular, anyone who does not apply for a public notice to estate creditors (Aufgebot der Nachlassgläubiger) although he has reason to assume unknown estate liabilities acts negligently. If the deceased lived abroad for years, the heirs often know only fragments of outstanding taxes in the state of residence, loans or guarantees. The public notice is only dispensable if its costs are disproportionately high in relation to the estate.
Via Section 1985 (2) BGB, Section 1980 BGB applies accordingly to the estate administrator. Opinions differ on exactly when the heir’s duty begins, in particular whether before or only after acceptance of the inheritance; a cautious heir acts at the latest from acceptance and the first signs of over-indebtedness.
Limiting Liability: Estate Insolvency, Estate Administration, Plea of Insufficiency
German law offers the heir several ways to protect his own assets. Which one is suitable depends above all on whether the estate is over-indebted and whether it covers the costs of the proceedings.
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| Instrument | Requirement | Effect | Provision |
|---|---|---|---|
| Disclaimer | deadline six weeks, six months if the deceased’s last residence was only abroad or the heir was abroad when the deadline began | the heir does not become heir | Sections 1942, 1944 BGB |
| Estate administration | application by the heir or an estate creditor if the heir’s conduct or financial situation endangers satisfaction of the creditors (creditors only within two years of acceptance); the estate covers the costs; useful mainly where the estate is sufficient | liability limited to the estate; if over-indebtedness emerges, the administrator must file for insolvency (Section 1985 (2) BGB) | Sections 1975, 1981, 1982 BGB |
| Estate insolvency proceedings | insolvency or over-indebtedness of the estate, the estate covers the costs of the proceedings | liability limited to the estate, creditors paid pro rata according to rank | Section 1975 BGB, Sections 315 et seq. InsO |
| Plea of insufficiency | proceedings not practicable for lack of assets to cover costs, lifted or discontinued | heir may refuse satisfaction to the extent the estate is insufficient; surrender of the estate for enforcement | Sections 1990, 1991 BGB |
| Plea of over-burdening (Überschwerungseinrede) | over-indebtedness is due to legacies and testamentary burdens | settlement under Sections 1990, 1991 BGB | Section 1992 BGB |
| Three-month plea (Dreimonatseinrede) | first three months after acceptance, not beyond the drawing up of an inventory | temporary right to refuse performance | Section 2014 BGB |
If a disclaimer is still possible, it is usually the simpler route. Estate administration where the estate is sufficient but complex is covered in the article Appointing an estate administrator in cross-border cases. If estate insolvency proceedings are opened, any ongoing estate administration ends (Section 1988 (1) BGB).
The Plea of Insufficiency for Small Estates
Often an over-indebted estate is not even sufficient to cover the costs of the proceedings; the insolvency court then rejects the application for lack of assets (Section 26 (1) InsO). It is precisely this that opens up the plea of insufficiency under Section 1990 BGB to the heir: he may refuse satisfaction to the extent the estate is insufficient, but must surrender the estate for enforcement. In doing so, he is responsible like an agent (Section 1991 (1) in conjunction with Section 1978 BGB) and must settle compulsory portions, legacies and testamentary burdens in the order of ranking that applies in insolvency proceedings (Section 1991 (4) BGB). Whether the estate is insufficient is measured by the entire estate; foreign assets count, even if the heirs do not yet have access to them.
International Jurisdiction: EuInsVO, Section 315 InsO and EuErbVO
Where there is a foreign element, the first question is whether German courts may open estate insolvency proceedings at all. This is a different question from that of the competent probate court for a certificate of inheritance or a disclaimer, which is explained in the article Probate court jurisdiction for a residence abroad.
EU Cases: Art. 3 EuInsVO
The EuInsVO does not expressly regulate estate insolvency. According to the prevailing view in the literature, it nevertheless applies to estate insolvency proceedings if the case has a cross-border element within the EU. As an indication, it is pointed out that Annex A of the predecessor Regulation (EC) No 1346/2000 already listed, for Ireland, proceedings concerning the estates of deceased insolvent persons.
Under Art. 3 (1) EuInsVO, the courts of the Member State in which the debtor has the centre of his main interests have jurisdiction. For natural persons not engaged in self-employed activity, it is presumed, in the absence of proof to the contrary, that this is the place of their habitual residence; this presumption does not apply if the habitual residence was moved to another Member State in the six months before the application. For the estate, the connecting factor is the deceased and his last habitual residence at the time of death, not the residence of the heirs. How the six-month rule, which refers to the insolvency application, is to be applied to a debtor who has already died has not been conclusively clarified.
The EuErbVO also uses the last habitual residence as the connecting factor in Art. 4 and Art. 21, so that insolvency jurisdiction and succession law often run in parallel. Under Art. 76 EuErbVO, the Insolvency Regulation remains unaffected; the reference there to the old Regulation (EC) No 1346/2000 is to be read, under Art. 91 (2) EuInsVO, as a reference to Regulation 2015/848. Insolvency jurisdiction therefore follows the EuInsVO, not the EuErbVO. Moreover, habitual residence is not to be equated with the tax concept in Section 9 AO, which applies for taxation purposes.
Local Jurisdiction under Section 315 InsO
If Germany has international jurisdiction, Section 315 InsO determines the local court: what matters is the general place of jurisdiction of the deceased at the time of death, usually his residence, or, in the case of self-employed activity, the place where it was centred.
The Federal Court of Justice (Bundesgerichtshof, BGH) had to assess a case in which the deceased had the centre of his life in Spain (BGH, decision of 14.01.2010, IX ZB 76/09). It stated that, if the EuInsVO were applicable, German international jurisdiction would have been lacking, and that because of the residence abroad there was also no domestic place of jurisdiction under Section 315 InsO. However, the BGH did not itself decide whether the jurisdiction rule of the EuInsVO applies to estate insolvency proceedings. It merely assumed its applicability hypothetically, referring to the probably prevailing opinion, which affirms it; the question was not decisive for the outcome. There is thus as yet no leading decision of the CJEU or the BGH on this question. For heirs of emigrants, German proceedings over the entire estate are therefore regularly not the right route where the last residence was abroad.
Third Countries outside the EU
If the habitual residence was outside the EU, for example in Switzerland, the USA or Thailand, Art. 3 EuInsVO does not apply; German international insolvency law under Sections 335 et seq. InsO applies. If there is no place of jurisdiction in Germany, particular proceedings over the domestic assets may be considered under Section 354 InsO, but without a domestic establishment only on the application of a creditor with a substantiated particular interest. How this provision is to be applied to estates must be examined in each individual case. Germany in principle recognises foreign insolvency proceedings under Section 343 InsO, unless the foreign court would lack jurisdiction under German law or recognition would be manifestly incompatible with essential principles of German law.
Foreign Assets in the Insolvency Estate
In German main proceedings, German insolvency law applies under Art. 7 EuInsVO, including to the questions of which assets form part of the insolvency estate and in what order claims are satisfied. In principle, the entire estate is covered, including accounts, securities accounts and real estate in other Member States.
Under Art. 19 (1) EuInsVO, the opening is recognised in the other Member States as soon as it becomes effective in the state of the opening of proceedings. Under Art. 21 (1) EuInsVO, the insolvency practitioner may exercise his powers under German law there, but must comply with the law of the respective state; coercive measures require an order from the local courts (Art. 21 (3) EuInsVO). Rights in rem in assets located in another Member State, such as a land charge on the foreign property, remain unaffected under Art. 8 EuInsVO.
Towards foreign banks, the insolvency practitioner can prove his powers with the European Certificate of Succession. The Higher Regional Court (Oberlandesgericht, OLG) Frankfurt am Main has ruled that Art. 76 EuErbVO does not preclude the issue of such a certificate to an estate insolvency practitioner and that the practitioner is entitled to apply under Art. 63 EuErbVO (decision of 09.02.2021, 21 W 151/20); the case concerned assets held with a Croatian bank. Outside the EU, the law of the state where the assets are located decides on recognition and access; an adviser in that country should be involved for this.
Creditors Enforcing Abroad
Under Section 321 InsO, enforcement measures against the estate after the death do not confer a right to separate satisfaction. If, after main proceedings have been opened, a creditor has seized an asset of the insolvency estate in another Member State and has been satisfied in whole or in part, he must surrender what he has obtained to the insolvency practitioner under Art. 23 (1) EuInsVO, subject to Arts. 8 and 10. How titles are enforced across borders is described in the article Enforcing judgments abroad.
When the Main Proceedings Take Place Abroad
If the last habitual residence was in another Member State, the main proceedings are opened there and follow the insolvency law of that state (Art. 7 EuInsVO). Secondary proceedings in Germany require an establishment in Germany under Art. 3 (2) EuInsVO, which private deceased persons often lack; the German account or the German property is then also covered by the foreign proceedings.
Under Art. 23 (2) (g) EuErbVO, the law applicable to the succession under Art. 21 or Art. 22 EuErbVO also governs liability for the debts under the succession. If the deceased chose German law, as described in the article Making a will with a residence abroad, a foreign insolvency court may apply its own procedural law but have to assess the status of heir and the heirs’ liability under German succession law. How the German limitations of liability then take effect is open and must be clarified in the individual case. An adviser in the state concerned should be consulted on the foreign law itself.
Creditors Abroad: Lodging Claims
Under Art. 53 EuInsVO, creditors from another Member State may use any means of communication accepted in the state of the opening of proceedings and do not need a lawyer solely for lodging their claim. They may use the standard form “Lodgement of claims” in any official language of the institutions of the Union; a translation may be required (Art. 55 (1) and (5) EuInsVO). The period for lodging claims is at least 30 days for them after publication in the insolvency register or notification (Art. 55 (6) EuInsVO). German proceedings are published at www.insolvenzbekanntmachungen.de. Creditors from third countries lodge their claims under the InsO without these facilitations.
Persons entitled to a compulsory portion and legatees abroad rank behind all other insolvency creditors under Section 327 InsO. On enforcing compulsory portion claims in other respects, see the article Compulsory portion rights and foreign assets.
Example
The following case is entirely fictitious. Bernd last lived in Augsburg. He leaves 8,000 euros in a current account, a holiday home in Spain encumbered with a land charge in favour of a Spanish bank (value approximately 120,000 euros) and debts of around 210,000 euros, including invoices from a Spanish tradesman and an income tax back payment. His heir is his daughter Lena, who lives in Canada.
- Disclaimer: As Lena is abroad when the deadline begins, the deadline is six months (Section 1944 (3) BGB).
- After acceptance: If she recognises the over-indebtedness, she must file for insolvency without undue delay (Section 1980 BGB), and she must do so in Germany, because Bernd’s last habitual residence was here, at the insolvency court for his last place of residence (Section 315 InsO).
- Estate and creditors: The holiday home forms part of the insolvency estate; the land charge remains unaffected (Art. 8 EuInsVO). The tradesman lodges his claim using the standard form.
- Result: Once proceedings are opened, Lena is liable only with the estate (Section 1975 BGB); if the application is rejected for lack of assets, she still has the plea of insufficiency (Section 1990 BGB).
Common Mistakes in Practice and Checklist
- Waiting until all foreign documents have arrived. The duty to file is linked to knowledge or negligent ignorance of over-indebtedness. Record assets and debts in all countries early and, if there are indications of unknown debts, consider a public notice to creditors.
- Preferring individual creditors. Anyone who pays although he could no longer assume that the estate was sufficient for all risks personal liability under Sections 1978, 1979 BGB. Paying out compulsory portions and legacies prematurely can also be challenged under Section 322 InsO.
- Applying to the wrong court. What matters is the last habitual residence of the deceased, not the residence of the heirs.
- Drawing up an incomplete inventory. Anyone who, for example, deliberately omits a significant foreign account and thereby makes the inventory substantially incomplete has unlimited liability under Section 2005 (1) BGB; the same applies if an inventory deadline expires unused (Section 1994 (1) BGB).
- Overlooking unknown heirs. An estate curator is himself entitled to apply (Section 317 (1) InsO); for more details, see the article Estate curatorship in cross-border cases.
- Dealing with taxes and foreign law on the side. Where the tax treatment is unclear, for example of the deceased’s tax debts, consider a binding ruling (verbindliche Auskunft) from the tax office under Section 89 (2) AO before implementation and, where there is a foreign element, also involve the authorities in the other state; for assets and proceedings abroad, involve an adviser in that country.
Conclusion
Estate insolvency with a foreign element follows Sections 315 et seq. InsO and Sections 1975 et seq. BGB, overlaid by European law. The decisive factor is the last habitual residence of the deceased: if it was in Germany, German main proceedings in principle also cover assets in other Member States; if it was in another EU state, the proceedings usually take place there, including over the German assets; in the case of third countries, the law there is decisive. Heirs should take the duty to file under Section 1980 BGB seriously, hold back payments and be aware of the plea of insufficiency. The interaction of a chosen German succession law with foreign insolvency proceedings has not yet been conclusively clarified.
Frequently Asked Questions
Is the heir liable with his own assets for the debts of the deceased?
In principle yes, under Section 1967 BGB. However, he can limit liability to the estate, in particular through estate insolvency proceedings or estate administration (Section 1975 BGB) or, if the estate does not cover the costs, through the plea of insufficiency (Section 1990 BGB).
Which court has jurisdiction if the deceased lived abroad?
Within the EU, according to the prevailing view, the courts of the state in which the deceased last had the centre of his main interests have jurisdiction under Art. 3 (1) EuInsVO, which for private individuals is, under the statutory presumption, his habitual residence. If he last lived in Spain, a Spanish court will usually have jurisdiction, not the insolvency court at the heirs’ place of residence in Germany.
Does a property abroad form part of the insolvency estate?
In German main proceedings, in principle yes, if it is located in an EU Member State; the opening is recognised there (Art. 19 EuInsVO). Rights such as a land charge on the property remain in place (Art. 8 EuInsVO). For properties in third countries, the law there decides on recognition and access.
How much time does the heir have to file for insolvency?
There is no fixed deadline. Section 1980 BGB requires an application without undue delay as soon as the heir knows, or negligently does not know, of the insolvency or over-indebtedness. Estate creditors can only file the application within two years of acceptance of the inheritance (Section 319 InsO).
Can creditors from abroad take part in German estate insolvency proceedings?
Yes. Creditors from other EU states can lodge their claim using the standard form in any official language of the EU institutions and have at least 30 days from publication or notification (Arts. 53, 55 EuInsVO). Creditors from third countries lodge their claims under the rules of the Insolvency Code.
Attorney Dr. Johannes Fiala and the Munich-based firm, which focuses on international succession law, tax law and asset protection, advise heirs and estate creditors on over-indebted estates with a foreign element, from examining a disclaimer and filing for insolvency with the competent court to securing assets abroad. Dr. Fiala has published extensively on questions of emigration and asset protection. Please get in touch with the firm without obligation to discuss your individual situation in an initial consultation.
