In short: If the estate is overindebted (überschuldet), you can disclaim the inheritance (ausschlagen) within six weeks of gaining knowledge (§ 1944 (1) German Civil Code, Bürgerliches Gesetzbuch, BGB) or limit your liability to the estate through estate administration (Nachlassverwaltung), estate insolvency (Nachlassinsolvenz) or the plea of insufficient estate (Dürftigkeitseinrede) (§§ 1975, 1990 BGB). Do not act like an owner of the estate and do not wait: an heir who has accepted the inheritance and knows of the overindebtedness must in principle apply for estate insolvency without delay (§ 1980 BGB), otherwise personal liability threatens.
An heir who finds that the debts of the deceased may exceed his or her assets is under time pressure: the estate is overindebted, what to do? The first answer is that in Germany an inheritance does not necessarily lead to liability with your own assets. The law knows several ways to limit liability to the estate or to avoid the inheritance altogether. Which way fits depends on how certain the overindebtedness is, which deadlines are running and what is actually in the estate. This article sorts out the options, names the deadlines, identifies typical mistakes and shows when legal help makes sense. The legal position is October 2026. The focus is on the case of German law with a domestic estate; foreign connections follow in a separate section. This matters for readers abroad too, for example heirs living outside Germany to whom a German estate falls.
What Does “Overindebted Estate” Mean?
An estate is overindebted when the liabilities exceed the assets of the deceased. A comparison is decisive: on one side are accounts, real estate, vehicles, securities and objects, on the other side loans, unpaid invoices, tax debts, guarantees and the costs of the succession itself, such as the funeral (§ 1968 BGB).
The reason lies in the principle of universal succession (Gesamtrechtsnachfolge): upon death, the assets pass as a whole to the heir or heirs (§ 1922 BGB), including the debts. The heir is liable for the estate liabilities (§ 1967 BGB). This liability is not unlimited in every case, however. It can be limited to the estate if the statutory routes are taken in time and correctly. That is precisely what follows.
Typical causes are unpaid loans, property financing, tax arrears, care costs, guarantees and liabilities from self-employment.
Immediate Measures: Gain an Overview without Creating Facts
Before you decide on a route, you need a picture of the situation. At the same time, you should avoid pre-empting the decision through your conduct.
- Note the deadlines: the date on which you learned of the death and of the ground of your appointment as heir is decisive for the disclaimer period.
- Go through the documents: bank statements, loan agreements, tax assessments, insurance policies, land register extract, reminders, mail of the last months.
- Keep a provisional list: assets and liabilities separately, with source and date. Values are initially estimates.
- Contact the probate court (Nachlassgericht): there you can find out whether a will or inheritance contract has been opened and whether proceedings are already pending.
- Reply politely to creditors, but acknowledge nothing and promise no payments.
What you had better refrain from in this phase is important: emptying accounts, selling valuables, clearing out the apartment or collecting claims of the estate. Such acts can be treated as acceptance of the inheritance, and after acceptance a disclaimer is excluded (§ 1943 BGB). Whether specific conduct amounts to acceptance depends on the individual case. Necessary protective measures, such as locking the apartment, notifying the insurer or arranging the funeral, are in themselves usually uncritical; in case of doubt you should take advice first.
The Five Routes at a Glance
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| Route | Effect | Timing / period | Typical consequence |
|---|---|---|---|
| Disclaimer (§§ 1944, 1945 BGB) | You are treated as a non-heir | six weeks from knowledge, in foreign cases six months | Inheritance passes to the next person called; you also have no compulsory portion |
| Estate administration (§§ 1975, 1981 BGB) | Liability limited to the estate, an administrator takes over | on application; requires an estate that covers the costs (§ 1982 BGB) | You lose the power of disposal |
| Estate insolvency (§§ 315 ff. InsO) | Liability limited to the estate, creditors are satisfied in an orderly way | duty to apply once you know (§ 1980 BGB) | The insolvency administrator realises the estate |
| Plea of insufficient estate (§ 1990 BGB) | You refuse payment to the extent the estate is not sufficient | if proceedings are not possible for lack of assets | You hand the estate over for enforcement |
| Three-month plea and plea of public notice (§§ 2014, 2015 BGB) | Time to clarify | the first three months after acceptance; public notice after application | Postponement, not a permanent solution |
The disclaimer is the clearest cut and must be decided first in terms of time.
Route 1: Disclaim the Inheritance
Period and Start
The disclaimer is possible only within six weeks (§ 1944 (1) BGB). The period begins when you learn of the accrual of the inheritance and of the ground of the appointment. If you are appointed by will or inheritance contract, it does not begin before the probate court announces the disposition. It extends to six months if the deceased had his or her last residence only abroad or if you are abroad when the period begins (§ 1944 (3) BGB). Someone who is appointed only through the disclaimer of another heir often learns of the accrual later; the period then begins with this knowledge, not with the death.
Form and Jurisdiction
The declaration must be made to the record of the probate court or in publicly certified form (§ 1945 BGB). A simple email or a letter to creditors is not sufficient. What matters is that the declaration reaches the probate court within the period; certification alone is therefore not enough if the declaration arrives too late.
Consequences
With the disclaimer, the accrual to you is deemed not to have occurred, and the inheritance falls to the next person called (§ 1953 BGB). That may be your children (for an overview of succession see Statutory succession on emigration). Anyone who disclaims in principle also has no compulsory portion, because he or she no longer belongs to the entitled persons. An exception may exist if you were appointed only subject to restrictions or encumbrances (§ 2306 BGB). In addition, a spouse in the matrimonial property regime of community of accrued gains (Zugewinngemeinschaft) can claim equalisation of accrued gains and the compulsory portion despite the disclaimer (§ 1371 (3) BGB).
Minor Children
If parents disclaim for their minor child, the approval of the family court is in principle required. Under § 1643 (3) BGB it is as a rule not necessary if the inheritance accrued to the child only through the disclaimer of the representing parent; it is different if the parent was appointed alongside the child. A separate period runs for each person appointed. The approval should be applied for within the period and proved to the probate court in good time; whether and for how long the approval procedure suspends the period (§ 1944 (2) sentence 3, § 206 BGB) should be clarified in the individual case.
Contestation
If someone accepted the inheritance because he or she did not know of the overindebtedness, or missed the disclaimer period, contestation may come into consideration within narrow limits (§§ 1954, 1956 BGB). The period for contestation is as a rule also six weeks from knowledge of the ground for contestation. Whether a mistake about the overindebtedness is legally relevant depends on the individual case; this route should not be relied upon.
Route 2: Estate Administration
Estate administration is a guardianship (Pflegschaft) for the purpose of satisfying the estate creditors (§ 1975 BGB). It is ordered by the probate court on the heir’s application (§ 1981 (1) BGB); in a community of heirs, the heirs can apply for it only jointly, and after the division of the estate it is excluded (§ 2062 BGB). Estate creditors can also apply for it if there is reason to assume that satisfaction from the estate is endangered by the conduct or the financial position of the heir (§ 1981 (2) BGB), and within two years of acceptance.
The estate is thereby separated from the heir’s own assets, and liability is limited to the estate. The price: the heir loses the power to administer the estate and to dispose of it (§ 1984 (1) BGB). The administrator receives remuneration from the estate (§ 1987 BGB), and court costs are added. If the estate is not sufficient to cover the costs, the court can refuse the order (§ 1982 BGB); if this turns out only later, the estate administration can be lifted (§ 1988 (2) BGB).
Estate administration is suitable above all when it is unclear whether the estate is overindebted, when it is hard to survey, or when the heirs want security against personal liability without waiting for an insolvency. It also comes into question when the value of a business in the estate is doubtful: the estate administrator must, if necessary, apply for estate insolvency himself or herself (§ 1985 (2) with § 1980 BGB). And it is a route for heirs who are unsure whether to disclaim and instead want to keep their liability low. For the distinction from estate guardianship (Nachlasspflegschaft), which serves to secure the estate when the heirs are unknown, see Estate guardianship with a foreign connection and Appointing an estate administrator abroad.
Route 3: Estate Insolvency and the Heir’s Duty to Apply
If it is established that the estate is unable to pay its debts or is overindebted, the heir can apply for the opening of estate insolvency proceedings. Grounds for opening are inability to pay and overindebtedness; imminent inability to pay applies only to applications by the heir and certain other persons (§ 320 InsO). The proceedings distribute the estate to the creditors in an orderly way. The heir’s liability is thereby limited to the estate.
An heir who, after acceptance, positively knows that the estate is unable to pay its debts or is overindebted must apply without delay for the opening of estate insolvency proceedings. If the heir breaches this duty, he or she is liable to the creditors for the resulting loss (§ 1980 BGB). Negligent ignorance is equal to knowledge. Where there are indications of unknown estate debts, it is considered negligent not to apply for a public-notice procedure (Aufgebotsverfahren), unless the costs are out of proportion to the estate. Anyone who merely waits therefore exposes himself or herself to a liability risk of his or her own.
Applications by creditors are admissible only for a limited time: the application of an estate creditor is inadmissible after two years have passed since acceptance of the inheritance (§ 319 InsO).
For questions of jurisdiction and foreign connections, the article Estate insolvency with a foreign connection goes into more depth.
Route 4: Plea of Insufficient Estate When Not Even the Costs Are Covered
If the estate is not sufficient to cover the costs of estate administration or insolvency proceedings, both routes fail “for lack of assets” (mangels Masse). For this case the law gives the heir the plea of insufficient estate: he or she may refuse to satisfy an estate creditor to the extent the estate is not sufficient. He or she must hand over the estate for the purpose of enforcement (§ 1990 (1) BGB). The heir’s right is not lost because a creditor, after the death, obtained a lien or a mortgage by way of enforcement or execution of an attachment, or a priority notice (Vormerkung) by interim injunction (§ 1990 (2) BGB).
The plea must be raised in the proceedings, and the judgment must reserve to the heir the limitation of his or her liability (§ 780 (1) ZPO). If the reservation is missing, the creditor can enforce against the heir’s own assets. Against a payment order (Mahnbescheid), you should therefore lodge an objection in time.
Route 5: Three-Month Plea, Public Notice and Inventory
An heir who has accepted the estate and needs time can use the three-month plea: in the first three months after acceptance, the heir may refuse to settle estate liabilities (§ 2014 BGB). The creditors’ public notice (§§ 1970 ff. BGB, procedure under FamFG) serves to force unknown creditors to register their claims; it can also establish a plea of public notice (§ 2015 BGB).
The estate inventory is often misunderstood. It is a list of the estate that is filed with the court (§§ 1993 ff. BGB). The inventory alone does not limit liability. On the contrary, the limitation of liability can be lost if a period for the inventory set by the court at a creditor’s request passes unused (§ 1994 BGB) or if the inventory is deliberately incomplete (§ 2005 BGB).
Who Is Liable When? Special Situations
Co-heirs
Several heirs form a community of heirs (Erbengemeinschaft) and are liable as joint and several debtors, but until the estate is divided they can limit their liability to the estate (§§ 2058, 2059 BGB). For the division where there is real estate abroad, see Community of heirs with foreign real estate. If a co-heir disclaims, his or her share falls to the next person called, for example his or her children; only if there is no such heir can the share of the other co-heirs increase. The position should therefore be coordinated early.
Minor Heirs
For minor heirs, § 1629a BGB provides a limitation of liability to the assets existing when they reach the age of majority. This does not replace examining the routes above.
Businesses, Real Estate and Contracts
For shareholdings, the legal form and the articles of association matter. A hasty sale of an encumbered property can count as acceptance. Claims under contracts for the benefit of third parties, for example a life insurance policy with a named beneficiary, regularly do not fall into the estate. Tenancy agreements pass to the heirs; for tenancies the law provides a special right of termination (§ 564 BGB), whose short period must be checked.
Taxes with an Overindebted Estate
Inheritance tax arises only to the extent there is an enrichment. Estate liabilities are deducted from the assets; these include the debts of the deceased as well as funeral and settlement costs, where for certain costs a lump sum is applied without proof (§ 10 (5) no. 3 sentence 2 ErbStG: 15,000 euros). In case of genuine overindebtedness, there is therefore regularly no enrichment left. The acquirer in principle has a duty to notify the tax office within three months of knowledge (§ 30 ErbStG), with statutory exceptions, for example after the court’s opening of a will.
Tax debts of the deceased pass to the heirs (§ 45 AO); outstanding tax returns of the deceased must be filed late.
Limitation and Deadlines at a Glance
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| Period | Duration | Legal basis |
|---|---|---|
| Disclaimer | six weeks, in foreign cases six months | § 1944 BGB |
| Contestation of acceptance or disclaimer | as a rule six weeks from knowledge of the ground | § 1954 BGB |
| Application by an estate creditor for estate insolvency | two years from acceptance | § 319 InsO |
| Application by an estate creditor for estate administration | two years from acceptance | § 1981 (2) BGB |
| Three-month plea | three months from acceptance | § 2014 BGB |
| Notification to the tax office | three months from knowledge | § 30 ErbStG |
For the limitation of claims against the estate, the general rules apply, as a rule three years from the end of the year and knowledge (§§ 195, 199 (1) BGB). The succession does not make limitation start anew; however, a suspension of expiry secures the creditor a minimum period after acceptance (§ 211 BGB). If the heir acknowledges a claim, limitation starts to run anew (§ 212 BGB). That is a further reason not to concede anything in talks with creditors.
Three Mistakes Laypeople Often Make
- Waiting. The disclaimer period runs even when the situation is unclear; if it passes, the inheritance is deemed accepted (§ 1943 BGB).
- Acting like an owner. Anyone who clears out accounts, sells objects or collects claims may have accepted the inheritance unintentionally.
- No application despite known overindebtedness. The duty to apply under § 1980 BGB falls on the heir who knows of the overindebtedness; otherwise personal liability in damages to creditors threatens.
Costs and Effort
The fees for disclaimers and estate proceedings are governed by the Court and Notary Fees Act (Gerichts- und Notarkostengesetz) and depend on value. The cost debtors of estate administration in court proceedings are the heirs (§ 24 GNotKG); the administrator’s remuneration is paid from the estate, and the treasury is not liable for the remuneration of the estate administrator even if the estate is without means (Federal Court of Justice, BGH, order of 14.03.2018, IV ZB 16/17).
Foreign Connection: A Brief Classification
If the estate includes assets abroad or the deceased last lived abroad, it must first be clarified which inheritance law applies. From the perspective of German courts, the Succession Regulation (Erbrechtsverordnung) decides on the applicable law, even if the deceased lived in a third country (Art. 20 EuErbVO); it does not apply in Denmark and Ireland. As a rule, the last habitual residence is decisive (Art. 21 EuErbVO). The law applicable under the Regulation also determines how the heir is liable for estate liabilities (Art. 23 (2) EuErbVO). For declarations of disclaimer, the Regulation also provides that under certain conditions they can also be made before a court at the declarant’s habitual residence (Art. 13 EuErbVO); whether the form is sufficient there must be clarified in the individual case. For the foreign law itself, an adviser on the spot should be consulted. For orientation, see German inheritance law with residence abroad and Disclaiming an inheritance with a foreign connection: period, form and competent court.
When Legal Help Is Needed
Legal help makes sense in case of tight deadlines, unclear overindebtedness, several heirs, minors, businesses or real estate in the estate, open tax questions, a foreign connection, or when payment orders are already arriving.
Conclusion
Anyone asking what to do about an overindebted estate should first secure the deadlines, then clarify the figures and only then choose the route. The disclaimer as a rule ends liability for the estate debts, but also costs any advantages there may be. Estate administration and estate insolvency limit liability to the estate, but bring procedural costs and duties, including the duty to apply under § 1980 BGB. The plea of insufficient estate helps when not even the costs are covered. Most avoidable harm arises from waiting and from acts that can count as acceptance.
Frequently Asked Questions
Do I have to pay the debts of a deceased person if I inherit?
In principle the heir is liable for the estate liabilities (§ 1967 BGB). He or she can, however, avoid this liability by disclaiming, or limit it to the estate through estate administration, estate insolvency or the plea of insufficient estate. The routes require certain conditions and periods.
How long do I have to disclaim an overindebted inheritance?
As a rule six weeks from knowledge of the accrual of the inheritance and of the ground of appointment. If you were appointed by will or inheritance contract, the period does not begin before the probate court announces the disposition. It is six months if the deceased lived only abroad or you are abroad when the period begins (§ 1944 BGB).
Do I have to pay for the funeral even if I disclaim?
The funeral costs are among the estate liabilities (§ 1968 BGB). Irrespective of the status as heir, the funeral law of the federal states can impose a duty on close relatives to arrange the funeral. Whether and in what amount someone must pay depends on state law and the circumstances; an individual review is needed here.
What happens if all heirs disclaim?
The inheritance falls to the next person called in each case. If all statutory heirs disclaim, the state becomes the statutory heir; it is liable for estate liabilities only with the estate, without this having to be reserved to it in the judgment (§ 780 (2) ZPO). The probate court can order an estate guardianship to secure the estate.
Does this also apply to assets abroad or residence abroad?
Then the applicable law must be clarified first, mostly according to the deceased’s last habitual residence (Art. 21 EuErbVO). Foreign law may provide different rules on liability and disclaimer; an adviser on the spot should be consulted for this. Periods and forms should be clarified early.
Attorney Dr. Johannes Fiala and the law firm, with a focus on international inheritance law, tax law and asset protection in Munich, advise heirs and relatives on overindebted estates, from examining the disclaimer period through the choice between estate administration and estate insolvency to coordination with the tax office and, where there is a foreign connection, abroad. Dr. Fiala has published extensively on questions of emigration and asset protection. Contact the firm without obligation to have your individual situation discussed in an initial consultation.
