In deciding whether to accept an inheritance, either where there is no will or on the basis of a will, it is worth remembering that a successor who inherits an estate assumes rights, as well as liabilities of a deceased existing at the moment of death.
Above all, heirs become liable for a testator’s debts. Thus, in practice, an inheritance may turn out to be a real economic burden for successors.
Liability for debts before accepting inheritance
Successors acquire an inheritance automatically upon a testator’s death. Nevertheless this acquisition is not definitive. Heirs have six months to accept or refuse an inheritance since becoming aware of the testator’s death (this may be even months or years from the death). During that time the successor’s liability for debts is restricted to inherited assets. Therefore, debts cannot be enforced against a successor’s private property.
Should the heir fail to react after six-months from learning of the testator’s death, he impliedly accepts a succession by virtue of law (silent acceptance). Hence, during the six month period it is worth checking which rights and obligations constitute inherited estate and subsequently deciding whether accepting the inheritance is worthwhile. It may be advisable to apply for an inventory of the estate. A debt collector compiles the inventory upon a motion or ex officio in case of court proceedings. A debt collector examines the value of inherited assets and evaluates the amount of debt imposed on an estate.
Simple acceptance or acceptance with the benefit of an inventory
Once a successor declares acceptance of an inheritance, not only does this confirm the will to inherit, but it also extends his scope of liability for the deceased’s debts. Consequently, from the moment of acceptance creditors are entitled to enforce their claims against the successor’s private property.
However, a successor may decide on the scope of his liability for inherited debts. He may choose between simple acceptance of an inheritance and acceptance with the benefit of an inventory. Simple acceptance of an inheritance, i.e. without limitation of liability, means that that a successor is liable for all inherited debts proportionally to his share in an estate. Enforcement would be conducted from inherited estate and private property without limitation. On the other hand, acceptance of an inheritance with the benefit of an inventory reduces the successor’s liability for debts only to the amount of his share in the value of assets established in the estate inventory.
For example: Assuming that an inherited estate includes a car valued at PLN 15,000 and a loan worth PLN 30,000, if the inheritance is accepted with the benefit of an inventory, the successor’s liability is restricted to only PLN 15,000 (if he is the only successor). If the successor only declared simple acceptance he would have to repay the total loan, i.e. PLN 30,000. Either way a creditor is entitled to enforce that claim from the successor’s inherited assets (car) and private property.
Moreover, simple acceptance will always apply if a successor failed to make the statement during the six month period. Thus, in order to secure oneself against high claims of creditors, it is advisable, before this period expires, to decide either to refuse an inheritance or accept it with the benefit of an inventory. The statement should be made before a notary or district court with jurisdiction for the declarer’s place of residence or stay.
Furthermore, if there is more than one successor during the period between acceptance and division of inherited estate, they bear joint and several liability for inherited debts. This means that a creditor, after receiving enforcement title against successors, may claim from each debtor. Payment by either co-debtor automatically relieves the other from liability. In such case, if a co-debtor pays the entire debt, he has a right of recourse against remaining co-debtors. In other words, he may claim compensation for payments made to settle the debt.
Liability for debts after division of an estate
If an estate is inherited by several heirs (especially in statutory succession), they often decide to divide the property. Consequently the estate is divided into separate rights and items, which are acquired by particular heirs in accordance with their agreement and size of their shares. However, division of an estate does not include inherited debts, which remain to be imposed on all co-debtors. Nevertheless, joint and several liability ceases and each successor participates in debt only at an amount equal to the value of an inheritance share.
For example: If three sons inherit an estate that included obligations under a bill of exchange and two loans, which respectively amount to PLN 6,000, PLN 3,000 and PLN 9,000, each son – after the estate division – will have to assume 1/3 of each debt listed above.
It is not possible for a debt to be divided in such manner that – according to the example – each brother would wholly pay one indicated obligation. Although debtors may conclude an internal agreement on paying debts (e.g. one person obliges itself to pay a whole debt), such agreement would not be binding upon creditors.
Aldona Leszczyńska-Mikulska, Tomasz Krzywański, Private Client Advisory Group, Wardyński & Partners