Execution of a Will

The execution of a will is defined as the implementation (“execution”) of the last will of the testator by one or several persons appointed by him/her (“executor”). The German Civil Code contains provisions regarding the enforcement of the will in sections 2197 ff.

In the case of the execution for the settlement of a will, the executor only has the task to take possession of the testator’s estate, collect accounts receivable, settle any liabilities of the testator and to implement the testator’s instructions in his/her will or contract of inheritance, i.e. to fulfil any possible bequests and to distribute the estate to the heirs in accordance with the testator’s wishes. Moreover, the executor is also in charge of the preparation and submission of the inheritance tax return.

Ongoing execution of the will can also be ordered. In this case, the executor also has to administrate the estate for the heirs for the period specified by the testator - as a rule, no more than 30 years, in addition to the tasks of the executor in charge of the settlement of an estate.

Anyone who is legally able to prepare a will, i.e. who is older than 14 years, can order the execution of his/her will to be settled and/or to have the administration of his/her estate performed by an executor. As a result, the testator can influence his/her estate affairs and the future of his/her assets even after his/her death. 

In accordance with section 2197 sub-section 1 BGB [German Civil Code], an executor can only be appointed in a will/testament. This means it is important that you establish a will or a contract of inheritance in which the execution of the will is ordered. LHP is, of course, pleased to assist you to ensure compliance with all requirements regarding the form of the will and the order of execution of the will.

The order for an execution of the will is sensible whenever this is required by the situation: This might apply in the case of extensive assets or complicated asset structures, in the case of many or minor heirs or in the case of complex legal issues connected with the estate or whenever you anticipate conflicts among your heirs or are afraid that your heirs might disregard your last will. In these cases, a qualified executor can help to competently resolve the issues and can be a “neutral party” for their heirs and enforce your will - even against your heirs’ wishes. In the event of minor heirs, the order for execution of the will can mean that a court-appointed supplementary enforcer of the will is not needed or that, at least, the influence of such remains low.    

By creating a will or a contract of inheritance, the testator can specify his/her last will and testament and make arrangements for his/her succession. The appointment of an executor is an appropriate method to ensure that this last will and testament is implemented, and that the settlement or administration of the estate are carried out in line with his/her wishes and instructions.

The execution of a will offers the following advantages:

• The will of the testator - its execution and implementation - is safeguarded.
• orders regarding bequests or orders regarding the distribution of the testator’s estate are implemented,
• conditions which the testator imposes on his/her heirs and/or legatees are monitored.
• conflicts among the heirs and/or with other persons involved in the estate can be avoided,
• minor heirs or heirs living abroad, who often do not have legal expertise and are overwhelmed by the task of estate settlement, are protected,
• the estate assets are protected against access by debtors of the heir/s - for example also against access by the social welfare authorities,
• the workload of the heir(s) is reduced.

Basically, anyone can become an executor unless this is precluded by special obstacles in a specific case. Moreover, the spouse or full-age children or other relatives of the testator can also hold this office. Restrictions only apply if the person appointed as the executor is legally incompetent (section 2201 BGB).

Moreover, legal entities, such as a limited liability company (GmbH), can also be executors. This also applies to partnerships, such as companies using the OHG, KG and BGB corporate forms.

However, a sole heir cannot be appointed as the executor. But it is possible to appoint one or several joint heirs as the executor. Moreover, parties entitled to a statutory portion of the inheritance, legatees or usufructuaries can also be executors.

It is, of course, recommended that persons who have the testator’s trust be appointed and commissioned to exercise the office of an executor. Moreover, they should also have the required professional competence as well as a high degree of diligence, decisiveness and assertiveness and be impartial.According to section 2219 BGB, the executor is liable for the obligations of which he/she is in charge. Therefore, it is recommended not to appoint a legal layman for this office.

The testator can order that the executor should not only assume the settlement of his/her inheritance but should also administer the estate or parts thereof on an ongoing basis. This type of execution of a will is referred to as ongoing execution and can be ordered, at a maximum, for a period of 30 years as of the time of the inheritance (section 2210 sub-section 1 BGB). Ongoing execution can also be ordered until the death of an heir or of the executor of the will or until the time of another event in the person of the heir or executor of the will; in this case, ongoing execution can last for more than 30 years (section 2210 sub-section 2 BGB).

Both the heirs and the testator can benefit from ongoing execution: The heir is often legally inexperienced which is why an experienced and qualified executor can support him/her for a certain period during ongoing execution. The testator might want to preserve his/her assets as a whole over a longer period of time or ward off the threat of enforcement measures by heirs’ creditors or exclude heirs or legatees who are unsuitable as seen from the testator’s perspective or exclude unwanted legal representatives of heirs from the administration.

The main task of the executor is to carry out the testator’s last will and testament. In as far as is permitted under law, this last will and testament of the testator is decisive for the executor’s rights and obligations.

Therefore, the executor shall study the will or the contract of inheritance to establish the scope of his/her obligations. In addition, he/she shall comply with the legal obligations - including the preparation of an estate inventory and the submission of the inheritance tax return. The estate assets which the executor administrates must be kept separate from his/her own assets. This shall also be documented externally, which is referred to as the constitution of the estate.

In execution of the settlement of an estate, the tasks of the executor include the following:

• determining the estate and
• preparation of the estate inventory,
• inclusion of liabilities of the testator,
• settling the liabilities of the testator and other estate liabilities,
• execution of bequests or conditions,
• submission of the inheritance tax declaration,
• distribution of the (residual) estate to the heirs, if applicable under consideration of separation orders (distribution of inheritance).

If the testator ordered ongoing execution of his/her will within the meaning of section 2209 BGB, further tasks can be added for the executor:

• management of shareholdings (Please note: only if execution of the will is permitted under company law),
• management of real estate assets,
• management of securities assets,
• supporting individuals in need of care from the estate assets,
• monitoring compliance with conditions imposed by the testator,
• taking over tasks in the framework of a foundation established on the order of the testator. 

In principle, an executor cannot be dismissed from the office against his/her own wishes unless all heirs unanimously request this (section 2227 BGB). This gives the testator security that the executor appointed by him/her is secure in this position, i.e. that the testator’s wishes are carried out.

However, the executor can be dismissed if there is an important reason for this (section 2227 BGB). In this case, dismissal by the probate court is possible upon the request of the heirs or other parties involved. In this case, the probate court has to check whether there is an important reason for the dismissal requested. An important reason is deemed to apply whenever the executor has grossly violated his/her obligations or is unable to properly manage the estate. However, the actual circumstances of the executor and his/her personal conduct are material in each case. Possible cases include, e.g., the following: 

• preparation of the estate inventory delayed or omitted,
• acting in a manner contravening the testator’s last will and testament,
• unjustified execution of the process by the executor,
• enmity among several appointed executors,
• considerable conflict of interest between the executor and the heir(s) (with mere tension or enmity not being sufficient),

In this way, the heir and the other parties involved are to be protected against the legal power of the executor by enabling them to file a motion for the dismissal of the executor at the probate court in case of serious misconduct on the part of the executor. 

For his/her work, the executor is entitled to adequate compensation the amount of which the testator can already determined in his will (testament), section 2221 BGB. On the other hand, the testator can also order that compensation is not to be paid (section 2221 BGB). This is frequently the case if the executor is appointed from among the heirs or the testator assumes for other reasons that the executor would be willing to discharge this office without compensation. In these cases, the executor selected by the testator must work free of charge if he/she accepts the office; if he/she does not want to work without compensation, he/she must refuse the office.

The testator can determine a fixed amount or a fee in the amount of a percentage of the value of the estate or on the basis of a specified hourly rate according to the actual time required as compensation for the executor. A wide range of options are available. However, in making this provision, the testator should consider that the time required for the office of the executor is considerable and that the work also involves a liability risk. Therefore, the testator should not be too “economical” with regard to compensation to prevent the risk that the intended executor of the will might well refuse this office.

If the testator has not specified a certain compensation and has also not ordered that compensation is not to be paid, the amount of the compensation is based on the type, duration, and difficulty of the tasks to be carried out by the executor. The fair market value of the estate from which estate liabilities are not deducted forms the assessment basis for the compensation to be established as being adequate. This is because, in particular, in the case of extensive debt settlement, which is frequently one of the main tasks of the executor of a will, the executor would not be paid. Furthermore, the period of work as an executor may also concern a lump sum, with the compensation from this becoming due in partial amounts in line with the duration and the extent of the work in the case of the ongoing execution of a will.

There is no legal provision regarding the amount of compensation. In practice, well known rules and regulations are frequently used to calculate adequate compensation. For example, the Rhenish Table of 1925 and the “Recommendations of the German Notaries’ Association for the Compensation of Executors of Wills” (the so-called New Rhenish Table) is frequently used for this. However, these are only used as guidelines by the courts and do not replace comprehensive consideration of the tasks to be performed.