What Happens If My Partner Left Behind Debts?

Inheriting your partner’s estate can be a bittersweet experience, especially if the estate includes outstanding debts. Here’s an overview of what happens when debts are part of the inheritance and how to navigate this complex situation.

 
1. Understanding the Inheritance of Debts
In Germany, when you inherit an estate, you also inherit any liabilities attached to it. This means:

Debts left behind by your partner become part of the overall estate.
Creditors can claim repayment from the estate’s assets.
However, your personal assets are not immediately at risk if you handle the process correctly.

 
2. Accepting or Rejecting the Inheritance
If the debts exceed the assets, you have options:

Accept the Inheritance: You agree to take on both the assets and the debts.
Reject the Inheritance (Ausschlagung): If the liabilities are overwhelming, you can decline the inheritance entirely, but this decision must be made within six weeks of learning about your inheritance.
Request Limited Liability (Nachlassverwaltung): This ensures debts are repaid only from the estate’s assets, protecting your personal finances.
 
3. Conducting an Estate Inventory
An estate inventory (Nachlassverzeichnis) is critical when debts are involved. It provides:

A complete overview of the estate's assets and liabilities.
A basis for deciding whether to accept or reject the inheritance.
Transparency in dealing with creditors.
You can request this through the probate court or hire a professional to assist.

 
4. Paying Debts from the Estate
If you decide to accept the inheritance, debts must be settled before distributing any remaining assets:

Prioritize Creditors: Debts are paid in order of priority (e.g., taxes and secured debts first).
Use Estate Assets: Funds from bank accounts, the sale of property, or other liquid assets should be used to clear debts.
 
5. Protecting Yourself from Personal Liability
To avoid personal financial risk:

Do Not Combine Assets: Keep the estate’s assets separate from your own until all debts are settled.
Request Nachlassinsolvenz: If the estate cannot cover the debts, initiate insolvency proceedings to prevent creditors from targeting your personal assets.
 
6. Handling Secured Debts
If debts are tied to specific assets, such as a mortgage:

Transfer or Sell the Asset: You may need to sell the property to repay the mortgage.
Negotiate with Creditors: Sometimes, creditors are willing to settle for less or restructure payments.
 
7. Dealing with Family and Other Beneficiaries
If you share the inheritance with others:

Communicate Openly: Ensure everyone understands the estate’s financial situation.
Work Together: Cooperate with other heirs to settle debts and manage assets effectively.
 
8. Tax Implications of Debts
In Germany, debts can reduce the taxable value of the estate:

Deductible Debts: Liabilities such as loans and funeral costs are subtracted from the estate’s total value for inheritance tax purposes.
Proper Documentation: Keep records of all payments and liabilities to support tax filings.
 
9. Seeking Professional Support
Managing debts within an inheritance can be complex. Consider:

An Inheritance Lawyer: They can provide guidance on accepting or rejecting the estate and navigating legal obligations.
Financial Advisors: They can help assess the estate’s financial standing and develop a repayment plan.
 
10. Focus on Your Partner’s Wishes
While handling debts is a practical necessity, remember that your partner’s wishes are at the heart of this process. By addressing the liabilities responsibly, you can honor their legacy and protect their loved ones.

 
Conclusion
Debts in an inheritance can feel overwhelming, but with the right knowledge and support, you can manage the process effectively. Whether you choose to accept or reject the inheritance, staying organized and seeking professional advice can help you navigate this difficult time with confidence.