Legacy: meaning in a will and difference from an inheritance

What is a legacy?

The testator can, by will, give another person a financial benefit without appointing them as heir (Sec. 1939 BGB). The same is possible in a contract of inheritance (Sec. 1941 (1) BGB). Three persons are involved:

• Testator: directs the legacy.
• Legatee (beneficiary): receives the claim. This can be anyone, including a friend, an association or one of the heirs themselves.
• Person burdened: must fulfil the legacy. In case of doubt, this is the heir; however, a legatee can also be burdened (Sec. 2147 BGB). If there are several heirs, in case of doubt they bear the legacy among themselves in proportion to their shares of the inheritance (Sec. 2148 BGB).

Anything with a financial value can be left as a legacy: money, jewellery, a car, a securities account, a plot of land, a receivable or a right such as a usufruct or a right of residence. There are separate guides on usufruct and on the lifelong right of residence. A testamentary direction (Auflage) is not a legacy: it imposes an obligation to do something without anyone obtaining a right to it (Sec. 1940 BGB), for example looking after the grave.

Legacy or inheritance: the difference

On death, the heir takes the place of the testator: the assets pass to them as a whole (Sec. 1922 BGB), with all rights and debts. The legatee only receives a claim to a specific performance.

Feature	Heir	Legatee
Legal position	universal successor (Sec. 1922 BGB)	claim against the person burdened (Sec. 2174 BGB)
Ownership	on the death	only on transfer by the heir
Debts of the testator	liable (Sec. 1967 BGB)	not liable, exception: encumbrances on the item left as a legacy
Several beneficiaries	community of heirs (Sec. 2032 BGB)	not part of the community of heirs
Certificate of inheritance	can apply for one (Sec. 2353 BGB)	is not named in the certificate of inheritance
Disclaimer	within six weeks to the probate court, recorded by the court or publicly certified (Sec. 1944, 1945 BGB)	without a statutory time limit and without any particular form, to the person burdened (Sec. 2180 BGB)
Funeral costs	borne by the heir (Sec. 1968 BGB)	not borne by the legatee
Inheritance tax	yes	yes, same allowances (Sec. 3, 16 ErbStG)

Whether someone is an heir or a legatee is not decided by the word used in the will, but by what is meant. Anyone who receives the assets or a fraction of them is an heir, even if the will says "bequeath" (Sec. 2087 (1) BGB). Anyone who only receives individual items is, in case of doubt, not an heir, even if they are described as one (Sec. 2087 (2) BGB). "My niece inherits my gold watch" is therefore usually a legacy. It becomes difficult when one item makes up almost the entire estate, for example the house. How to word this properly is explained in the guide to writing a will; who inherits without a will is governed by intestate succession.

Why a legacy instead of an inheritance?

• Avoiding a community of heirs: One child inherits alone, and the others receive money or items. Nobody has to agree every step with the heir (more in the guide to the community of heirs).
• Remembering people outside the family: The neighbour who cared for you receives €10,000 without having to deal with accounts, the flat and debts.
• Distributing individual items in a targeted way: the stamp collection to the grandson, the piano to the goddaughter.
• Protecting the beneficiary: They are not liable for debts and do not pay for the funeral.
• Using allowances: legacies to children in a Berlin will, see super legacy.

Types of legacy

Type	What it means	Legal basis
Specific legacy (Stückvermächtnis)	a particular item from the estate, for example "my car"	Sec. 2169 BGB
Generic legacy (Gattungsvermächtnis)	an item described only by its kind, suited to the circumstances of the beneficiary	Sec. 2155 BGB
Alternative legacy (Wahlvermächtnis)	one of several items, for example "one of my three watches"	Sec. 2154 BGB
Legacy of procurement (Verschaffungsvermächtnis)	an item that does not belong to the estate; the heir must procure it or pay its value	Sec. 2169 (1), 2170 BGB
Preferential legacy (Vorausvermächtnis)	a legacy to an heir, in addition to their share of the inheritance	Sec. 2150 BGB
Sub-legacy (Untervermächtnis)	a legatee must themselves fulfil a legacy	Sec. 2147, 2186 BGB
Substitute legacy (Ersatzvermächtnis)	another person receives the item if the first beneficiary does not acquire it	Sec. 2190 BGB
Subsequent legacy (Nachvermächtnis)	the item passes on to a third party from a particular date or event	Sec. 2191 BGB
Legacy with power of designation (Bestimmungsvermächtnis)	the person burdened or a third party decides which of several persons receives the legacy or how it is divided	Sec. 2151, 2153 BGB
Purpose legacy (Zweckvermächtnis)	the testator states the purpose, and the person burdened determines the performance at their reasonable discretion	Sec. 2156 BGB
Legacy of usufruct or of a right of residence	the beneficiary may use or live in a property, and the heir becomes the owner	Sec. 1939 BGB in conjunction with Sec. 1030, 1093 BGB
Quota legacy (Quotenvermächtnis)	a fraction of the value of the estate

Preferential legacy or direction on division?

The heir receives the preferential legacy in addition to their share of the inheritance (Sec. 2150 BGB). A direction on division (Teilungsanordnung), on the other hand, only determines who takes over which item when the estate is divided (Sec. 2048 BGB); its value is credited against the share of the inheritance.

Example: Two siblings each inherit half of €600,000, including a flat worth €200,000. As a preferential legacy, the sister receives the flat and half of the remaining €400,000, €400,000 in total, and the brother €200,000. As a direction on division, she takes over the flat against her share of the inheritance of €300,000 and receives a further €100,000; both receive €300,000.

Super legacy: using allowances in a Berlin will

In a Berlin will, spouses appoint each other as sole heirs, and the children only inherit after the second death. However, each child can acquire €400,000 tax-free from each parent (Sec. 16 (1) no. 2 ErbStG). On the first death, the children receive nothing, and this allowance is lost.

The super legacy is not a statutory term but an arrangement: the spouses direct a legacy in favour of the children, with which the survivor is burdened, and leave it to the survivor to decide

• who among the children receives something (Sec. 2151 BGB),
• how it is divided among them (Sec. 2153 BGB),
• what and how much is paid, bound by the purpose stated in the will and at reasonable discretion (Sec. 2156 BGB),
• when it is fulfilled, within a fixed period.

Example: The father leaves €1,200,000, the mother is sole heir, and there are two children. Without a legacy, €700,000 remains taxable after her allowance of €500,000 (Sec. 16 (1) no. 1 ErbStG). If she designates €350,000 for each child, both remain below €400,000. The mother deducts the legacies as a liability of the estate (Sec. 10 (5) no. 2 ErbStG), her acquisition falls to €500,000 and is also tax-free. Calculated without the maintenance allowance, the family home, prior gifts and estate costs.

The catch lies in the due date. If the timing is left to the free discretion of the survivor, the legacy, in case of doubt, only becomes due on their death (Sec. 2181 BGB). The Inheritance Tax Act treats such legacies like a subsequent inheritance (Sec. 6 (4) ErbStG): the acquisition is then in principle deemed to come from the survivor (Sec. 6 (2) ErbStG), and the allowance after the first to die would be wasted. The will therefore needs a deadline by which the legacy must be fulfilled at the latest.

Also important:

• The survivor needs enough money, or fulfils the legacy with assets in kind, for example a property subject to a reserved usufruct.
• If the survivor cannot make the designation, or if a deadline set for them by the probate court on application expires, the children become joint and several creditors (Sec. 2151 (3) BGB); if only the division is in question, they are then entitled in equal shares (Sec. 2153 (2) BGB).
• In a Berlin will, the legacy can be mutually dependent (Sec. 2270 (3) BGB) and can no longer be changed unilaterally after the first death (Sec. 2271 (2) BGB).
• Recognition for tax purposes depends on the wording: have the will checked by a lawyer or notary and have the tax calculated by a tax adviser.

You have received a legacy: how to enforce it

How do you find out about it?

The probate court opens the will or contract of inheritance and notifies the parties in writing of the content that concerns them (Sec. 348 (1) and (3) FamFG). So you will usually receive a letter with the part that concerns you. You then contact the heir or the executor, who has to fulfil legacies (Sec. 2203 BGB).

When does the heir have to pay out the legacy?

Your claim arises on the death (Sec. 2176 BGB), and in the case of a condition or a start date only when it occurs (Sec. 2177 BGB). If the testator has set a date, that date applies; otherwise you can in principle demand performance immediately (Sec. 271 (1) BGB). However, the heir may refuse until three months after accepting the inheritance, at most until they have drawn up an inventory (Sec. 2014 BGB), in order to get an overview of debts and compulsory shares.

Money is transferred, a car handed over, a securities account re-registered. For real estate, the heir and the legatee declare the transfer before a notary, and you become the owner on registration in the land register (Sec. 873, 925 BGB). The heir must hand over rents and other fruits since the legacy vested (Sec. 2184 BGB); they can demand reimbursement of outlays on the item after the death (Sec. 2185 BGB). If they do not pay, demand payment in writing with a deadline; from the reminder, they may be in default. After that, an action remains.

Encumbered property: do you have to take over the loan?

In case of doubt, you cannot demand the removal of registered encumbrances (Sec. 2165 (1) BGB). If a mortgage secures a debt of the testator, in case of doubt you must, in relation to the heir, ensure that the creditor is satisfied, to the extent that the value of the land covers the debt (Sec. 2166 (1) BGB). So the loan can end up with you together with the house if the will says nothing else.

And if the item is no longer there?

If it no longer belongs to the estate at the time of death, the legacy is ineffective to that extent, unless it was meant to go to you in that case too (Sec. 2169 (1) BGB). If it was destroyed or taken away and the testator had a claim to compensation, for example against an insurer, in case of doubt that claim is deemed to be left as the legacy (Sec. 2169 (3) BGB). In the case of a monetary claim left as a legacy that was paid before the death, in case of doubt the sum of money is deemed to be left as the legacy (Sec. 2173 BGB). If the testator sold the item, it depends on interpretation.

Accepting or disclaiming a legacy

The rules are in Sec. 2180 BGB:

• You declare acceptance and disclaimer to the person burdened, usually the heir, not to the probate court.
• Only after the death, without a condition or time stipulation, and not just for a part (Sec. 2180 (2) and (3) in conjunction with Sec. 1950 BGB).
• There is no statutory time limit, but after acceptance a disclaimer is excluded. No form is prescribed; in writing with proof of receipt is advisable.
• If you are entitled to a compulsory share, the heir can set you a reasonable deadline; after that, the legacy is deemed to have been disclaimed (Sec. 2307 (2) BGB).

After the disclaimer, the legacy is deemed not to have vested (Sec. 2180 (3) in conjunction with Sec. 1953 (1) BGB). The item goes to a substitute legatee (Sec. 2190 BGB) or accrues to co-legatees (Sec. 2158 BGB); otherwise it remains with the heir. Disclaiming is worthwhile, for example, for a heavily encumbered property or if the compulsory share brings more. If you are an heir burdened with legacies, different rules apply: as a person entitled to a compulsory share, you can disclaim the share of the inheritance and claim the compulsory share (Sec. 2306 BGB), see disclaiming an inheritance.

Legacy and compulsory share

Someone who only receives a legacy is not an heir. If they are entitled to a compulsory share, for example as a child, they have a choice (Sec. 2307 (1) BGB): they accept the legacy and claim the difference up to the compulsory share, or they disclaim and claim the full compulsory share in money.

Example: A widower leaves €400,000 and two children. The daughter is sole heir, and the son receives the car worth €30,000 as a legacy. His compulsory share is half of the statutory share of the inheritance of one half (Sec. 2303 (1) BGB), i.e. €100,000. If he accepts the car, he can still claim €70,000; if he disclaims, he receives €100,000 in money. The basics and the calculation are explained in the guide to the compulsory share, and lifetime gifts in the guide to the compulsory share supplement.

If the heir has to pay a compulsory share, they can reduce legacies to the extent that they and the legatees bear the burden proportionately (Sec. 2318 (1) BGB); a legatee entitled to a compulsory share must be left their compulsory share (Sec. 2318 (2) BGB).

What takes precedence: creditors, compulsory share or legacy?

For the heir, the legacy is a liability of the estate like debts and compulsory shares (Sec. 1967 (2) BGB). If the estate is not sufficient, this order applies (Sec. 1991 (4) BGB, Sec. 327 (1) InsO):

Rank	Who is paid
1	creditors of the testator and other creditors of the estate
2	persons entitled to a compulsory share
3	legatees and testamentary directions
Remainder	stays with the heir

A legacy that excludes the compulsory share under Sec. 2307 BGB ranks equally with compulsory shares up to the amount of the compulsory share (Sec. 327 (2) InsO). The testator can give one legacy precedence over others (Sec. 2189 BGB). If the estate is overindebted precisely because of the legacies, the heir does not have to pay from their own assets (Sec. 1992 BGB).

When does a legacy become time-barred?

Claim	Period	Start	Legal basis
Money, movable items, securities accounts	3 years	end of the year in which the claim arose and you learned of the legacy and the heir	Sec. 195, 199 (1) BGB
Maximum period without knowledge	30 years	from when the claim arose	Sec. 199 (3a) BGB
Transfer of land, creation of a usufruct or right of residence	10 years	from when the claim arose	Sec. 196, 200 BGB
Claims against the estate	not before the end of 6 months	after acceptance of the inheritance	Sec. 211 BGB
Legacy subject to a condition precedent	ineffective after 30 years	from the death, if the condition has not occurred	Sec. 2162 BGB

Example: The testator dies in March 2026, and in May you learn of your legacy of money. The three years run from the end of 2026 and end at the close of 31 December 2029. How to suspend limitation is explained in the guide to limitation.

Inheritance tax on a legacy

A legacy is an acquisition upon death (Sec. 3 (1) no. 1 ErbStG). The tax arises on the death, and for legacies subject to a condition precedent or a time stipulation only when the condition or the date occurs (Sec. 9 (1) no. 1 ErbStG). As for the heir, the tax class and allowance depend on the relationship to the testator (Sec. 15, 16 ErbStG):

Legatee	Tax class	Allowance
Spouse, registered civil partner	I	€500,000
Children, stepchildren, children of deceased children	I	€400,000
Grandchildren whose parents are alive	I	€200,000
Parents and grandparents on an acquisition upon death	I	€100,000
Siblings, nieces and nephews, children-in-law, parents-in-law	II	€20,000
everyone else, for example unmarried partners and friends	III	€20,000

The heir deducts the legacy from their acquisition (Sec. 10 (5) no. 2 ErbStG). As a legatee, you notify the tax office of the acquisition within three months of learning of it (Sec. 30 (1) ErbStG). This does not apply in the case of a will opened by a German court, notary or consul from which your relationship to the testator is clear beyond doubt, unless real estate, business assets, certain company shares or foreign assets are involved (Sec. 30 (3) ErbStG). Clarify valuation and exemptions with a tax adviser.

Directing a legacy in a will: checklist

You write the will by hand and sign it (Sec. 2247 BGB) or make it before a notary (Sec. 2232 BGB); a contract of inheritance is only possible before a notary (Sec. 2276 BGB). The costs are explained in the guide Will at the notary: costs. Check beforehand:

• Have you deliberately distinguished between "heir" for the assets and "legacy" for individual items?
• Legatee with name, date of birth and address, item clearly described?
• Who fulfils the legacy if there are several heirs?
• Who receives the item if the beneficiary dies before you or disclaims (Sec. 2160, 2190 BGB)?
• Who bears loans on a property left as a legacy (Sec. 2165, 2166 BGB) and the notary and land register costs?
• What applies if you sell the item beforehand (Sec. 2169 BGB)?
• By when must the legacy be fulfilled?
• After compulsory shares, is the estate sufficient for all legacies, and should one take precedence (Sec. 2189 BGB)?
• Should an executor fulfil the legacies (Sec. 2203, 2223 BGB)?