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Can Brits with domicile in Germany avoid the German Compulsory Share Rules?

Theoretically yes, by using a choice of law clause in the will, but German Supreme Court established high hurdles

If the deceased – regardless of their nationality – had their habitual residence (which is essentially identical with the main residence) in Germany prior to their death, German inheritance law applies, including the provisions on the compulsory share / forced heirship (Pflichtteil). More on those Pflichtteil rules here:

What are the German Forced Share Rules?

Thus, spouses and offspring, and even parents if the decedent did not have any surviving children, cannot be entirely disinherited under German succession law. This goes against what many British citizens want when they draw up their last will and testament. So the question is: Can British nationals who live in Germany avoid the German Pflichtteil rules? Well, yes and no.

Avoid the compulsory share by electing the succession laws of England & Wales?

British citizens who are habitually resident in Germany may use a tool which the EU Succession regulation offers in Art. 22 para (1), which also applies to UK citizens in spite of the UK never having adopted the Regulation and even after Brexit:

Art 22 para (1) Coice of Law

1.A person may choose as the law to govern his succession as a whole the law of the State whose nationality he possesses at the time of making the choice or at the time of death.

A person possessing multiple nationalities may choose the law of any of the States whose nationality he possesses at the time of making the choice or at the time of death.

2.The choice shall be made expressly in a declaration in the form of a disposition of property upon death or shall be demonstrated by the terms of such a disposition.

3.The substantive validity of the act whereby the choice of law was made shall be governed by the chosen law.

4.Any modification or revocation of the choice of law shall meet the requirements as to form for the modification or revocation of a disposition of property upon death.

 

So, if an Englishman (or US citizen) who has his habitual residence in Germany does not want to be bound by the German compulsory share rules, he can simply choose the succession laws of England and Wales (or Texas, Florida or Illinois in case of our US testator). The surviving spouse and children, if written out of the will, are then not entitled to any compulsory share under German law.

Or do they?

German Supreme Court (BGH) restricts the right to make such a choice of law

Well, in real life, the situation is more complicated, as the German Supreme Court (Bundesgerichtshof) has ruled on 29 June 2022 (case no. IV ZR 110/21) that the German statutory right to claim a compulsory share may NOT so easily be circumvented by way of choice of law because this may violate what is known as “ordre public”. The forced share rules are being considered such an essential part of the German succession law principles, that electing the law of a country which knows no such compulsory share rules at all (like England and most US states) violates the German ordre public. This means that the choice of law clause in the will of an English (American) testator will not be applied by German courts of law if the disinherited spouse or child makes a forced share claim. 

Is this not a breach of EU law? No, it is not, because the EU Succession Regulation itself opens up this route for member states. According to Article 35 of the Regulation, the election of a national law (here for example English or American law) can be refused in exceptional circumstances if its application is incompatible with the public policy (ordre public) of the member state (here Germany).

However, the German Supreme Court has stipulated in said judgment that the “ordre public” violation requires that the specific case must have a “strong domestic connection” (“hinreichend starker Inlandsbezug”).

In the case the BGH had to decide in 2022, the testator was a British citizen, but had lived exclusively in Germany for many decades, had all his assets in Germany and the child claiming the compulsory share was also German national resident in Germany. So, the links to Germany could not have been any stronger. Except for the British citizenship of the testator, it was a purely German inheritance case. In other words: There was hardly any reasonable reason for the testator to choose English inheritance law in his will other than to avoid the German forced share rules.

What does this mean for cases where the facts are different? The closer the relationship of the testator to Germany, the smaller the chance of successfully avoiding the German rules on compulsory shares by means of a simple choice of law clause in the will.

However, the decision leaves open whether the BGH will also rule in the same way if the assets to be inherited are situated in the UK and/or if the children making the claim are resident/domiciled in the UK. Despite the BGH ruling, each case must therefore be analysed and assessed individually.

For solicitors advising British citizens domiciled in Germany, this means that they should probably advise the client to use a choice of law clause in their will but make certain to explain to the client that the German courts may override this choice of law clause with regard to the forced share rules.

More on German-British probate matters and international will drafting in these posts:

The law firm Graf & Partners was established in 2003 and specialises in British-German probate matters and international estate planning ever since. Contact German solicitor Bernhard Schmeilzl, LL.M. (Leicester) at +49 941 463 7070.

 

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