Disputes within the family, protracted probate proceedings with an uncertain end or an unfavourable share of the real estate – these are situations you will commonly encounter when inheriting. Their solution can be quite simple – it’s called alienation of inheritance. It comes in handy when you don’t wish to inherit, but you don’t want to walk away empty-handed either. How to transfer the heir’s share?
The alienation of inheritance allows you, as an heir, to dispose of your right to inheritance during the probate proceedings, i.e. not after its end. Simply put, this is a situation where, before you officially take possession of the inheritance as an heir and become the beneficial owner of the inherited property (for example, a house, accounts, or shares in a company), you may “sell”, donate or otherwise transfer your title to inheritance. However, you are not selling a specific item from the decedent’s estate (e.g. a car or furniture), but transferring your heir’s share, i.e. your right. The person who acquires such a title by inheritance (the “transferee”) becomes the “new” heir instead of you. Such person takes over not only the rights, i.e. what they actually receive from the inheritance, but also all obligations, including liability for any debts of the deceased.
Alienation of the inheritance is possible during the entire probate proceedings, i.e. from the death of the deceased until the end of the final decision of the court.
When alienation of inheritance is the right solution
Inheritance alienation is most often used in situations where the heir does not want to or cannot own or manage the inherited property themselves or prefers the certainty of an immediate sum of money to the uncertainty and complications associated with inheritance proceedings. It is therefore a tool that can significantly speed up and simplify the settlement and distribution of the estate if a suitable interested party to replace the heir can be found.
This can be useful, for example, in situations where family relations are not ideal and disputes can be expected to arise in connection with the inheritance. If you don’t want to be drawn into endless disputes over property, there is an option how to avoid them. In this case, you can transfer your share of the inheritance to any third party, such as another heir, sibling or investor. As a result, you no longer take part in anything. Instead, you get a pre-agreed amount and “step out of the game” before any issues start to appear.
Sometimes an heir does not want to get involved simply because he or she is not interested in the property. This is especially true for shares in real estate – for example, if you only inherit one-sixth of a house and you know it’s not worth the trouble. In this case, it makes more sense to transfer the share to someone who already owns the rest or wants to take care of the house. Of course, you can do this even after the probate proceedings are over, but if you take the path of alienating your share of the inheritance, you will save yourself the hassle and you will also receive compensation for your share in advance.
Fast money
An inheritance can also be alienated if the heir needs money quickly – for example, because of their own debts or an investment. Instead of waiting until the end of the inheritance proceedings, which in our experience can go on for months or years, it is possible to simply sell your title and receive the money immediately.
Typically, alienation of inheritance is also used in situations where the inheritance under the law does not cover the entire circle of the closest relatives, i.e. it does not “reach everyone”, for example, when the deceased lived in a household with his partner before his death, but the couple was not married, and at the same time had children, for example one son, and left no will. In such a case, the probate proceedings are conducted based on legal succession – only the son will inherit from the deceased, while the partner would be “left empty-handed”, even though she may have contributed significantly to building their joint property, not to mention taking care of her partner. It is possible to resolve such inequality by transferring the rights of succession between the son and the partner through an agreement on the alienation of inheritance.
At the same time, this option is an elegant solution to avoid the need for a transfer agreement for each individual item after the probate proceedings have been concluded, which can be emotionally and financially demanding and time-consuming. On the other hand, it is also necessary to carefully consider the tax implications.
How to do it
Alienation of inheritance has its own rules, needless to say. Firstly, bear in mind that it is only possible to alienate an inheritance if the decedent has not expressly prohibited this step, for example in a will, etc. However, if there is no such restriction, and you, as an heir, do not wish to take over the inheritance or a specific part of it for some reason (and you do not want to refuse or renounce the inheritance in favour of another person in the probate proceedings), you may then consider alienating the inheritance.
If you find an interested party willing to assume your heir’s rights, you may conclude a contract with them in accordance with Section 1714 of the Civil Code. Such contract must be in the form of a public deed, i.e. in the form of a notarial deed drawn up by a notary public. Make sure that it is not the same notary who makes decisions in the probate proceedings.
As far as the contractual type is concerned, it is usually a contract of sale or a donation in which you, as an heir, undertake to transfer your right of inheritance to someone else. You can do so at virtually any time during the entire probate proceedings, i.e. from the death of the deceased until the end of the proceedings. However, this period is clearly delimited; a contract concluded, for example, when the deceased was still alive would be invalid and would not be taken into account by the notary in the probate proceedings.
Price by agreement
You may contractually transfer the inheritance to relatives, other heirs, but also to any individual or legal entity that has not yet been included in the probate proceedings, i.e. even to someone who the decedent would not have considered as their heir at all. You may transfer your share for free or for consideration. It depends on the agreement between the parties concerned.
The price for the transfer (alienation) of the inheritance is at the discretion of the contracting parties, i.e. the original heir (the alienator) and the person to whom the heir wishes to transfer the inheritance (the transferee). You can agree on a price based on the estimated value of the assets in the estate, or you can set the price as a lump sum. An inheritance can be alienated for a symbolic amount, e.g. CZK 1, like in cases when it is transferred within the family.
The law does not provide for any obligation to use an appraisal or expert opinion, but such an opinion can help you to clarify the real value of the estate and can also serve as an argument when negotiating the price. If you do not know exactly what is included in the inheritance, it is a good idea to contractually agree on the price, for example by stipulating that the price may be adjusted according to the actual value of the inheritance when it is known.
Debts cannot be avoided
Beware of debts – the law says that the “original” heir and the “new” one are jointly liable for the decedent’s debts. This means that if the person you are supposed to inherit from had any debts (e.g. a loan, overdue taxes, etc.), the creditor may demand payment from both the new heir who took your place and you as the original heir, or even both at the same time. Unfortunately, the motto “all for one, one for all” applies here as well.
If the deceased had a debt of CZK 100,000 and the new heir (transferee) who inherits this debt does not have the money (for example, because the heir has not exercised the right to exclude assets from the inventory of the decedent’s estate), the creditor may demand payment of the entire amount from you as the original heir, without further notice, even if you have already transferred the inheritance. However, if you pay this amount, you have the right of recourse, i.e. you may subsequently claim it back from the transferee.
This regulation, however unfair it may seem at first, has a simple rationale – it is to prevent fraud and targeted manipulation with property. It is undesirable for people to transfer an inheritance to someone who has no assets just to “get rid” of responsibility for debts. That is why the law gives the creditor the right to claim a debt from both or either of them.
Boom or bust
A contract of alienation of inheritance may also be concluded as an aleatory contract, where the outcome, i.e. who gets what or who pays what, depends on a future uncertain event. This is a kind of “surprise” for the buyer – only time will tell if it is pleasant or not. Often, in the probate proceedings, it may not be completely clear at the time of the conclusion of the contract what the estate contains. For example, an inheritance may reveal unexpected assets (a forgotten foreign account or investments that skyrocket) or, conversely, hidden debts that no one knew about beforehand. Such uncertainty is typical of this type of contract.
In all these cases, the risk is borne by the transferee, i.e. the one who takes over the inheritance from the original heir. If it later turns out that the inheritance hardly contains anything and is worthless, or that it is burdened with debts, the transferee is not entitled to a refund, a reduction in price or a change in terms and conditions. Such person has taken over the title including all the uncertainties and fluctuations, which have to be counted on. Even if the inheritance turns out to be completely worthless or even negative, the contract remains valid.
This type of contract can be advantageous for the original heir, as they quickly get rid of all the risks associated with the inheritance and ideally still get money in return. On the other hand, however, the heir also forgoes any profit if the estate later shows funds or valuable items that they did not know about. For the transferee, it is therefore a bet on uncertainty that can bring profit or disappointment.
Bringing the contract to the notary
Once the contract of alienation of inheritance has been signed, both parties (the original heir and the new transferee) are obliged to inform the court in charge of the probate proceedings as soon as possible, namely the commissioner of the court, i.e. the notary in charge of the entire probate proceedings.
In practice, the notary who drew up the contract of alienation will often take care of this notification obligation for you, for example by informing the other notary in charge of the estate. This allows the probate court (or notary) to officially confirm that the transfer of inheritance has taken place. The information can be used for registration of a new heir instead of the original one and the proceedings may be resumed under the new situation.
Needless to say, in addition to alienation of inheritance, there are other ways you can influence the fate of your estate during your lifetime and after your death, from donating property during your lifetime, to making a will or other provisions mortis causa, to estate structures that literally outlive you and can serve for generations to come. Alienation of inheritance must also be clearly distinguished from the aforementioned refusal of inheritance – in which case, the heir renounces, without compensation, their rights, which pass to other heirs by law or by will. By contrast, in the case of alienation of inheritance, the heir actively transfers their title to a specific person of their choice, often for an agreed fee.
