Inheritance: How to secure your property responsibly in the event of death
Naturally, no one likes to think about death, but it is an inevitable part of everybody's life. To avoid your loved ones being caught up in the unpleasant and lengthy inheritance proceedings or the financial difficulties associated with the consequences of inheritance proceedings and death in the case of an unexpected event, it is advisable to take steps to secure your property and manage other affairs in the event of death, preferably in the form of a will. In the following article, we will explain in more detail the basic principles of inheritance proceedings and the possible complications that may arise in connection with them. We will also outline how (not) to make a disposition of property upon death and who the non-negligible heirs are.
How are inheritance proceedings conducted?
Inheritance proceedings, or probate proceedings, are initiated by the district court with jurisdiction over the place of the deceased’s last permanent residence. The district court appoints a particular notary, known as a court commissioner, to conduct the probate proceedings.
The court commissioner then conducts a preliminary inquiry as part of the probate process, during which they ascertain whether the deceased has left any disposition of property upon death or another instrument, identifies his or her personal and financial circumstances for determining the extent of the estate and other circumstances which may be relevant in the inheritance proceedings.
First of all, the court commissioner must deal with the question of the (legal) title of succession on the basis of which they will move forward in the process, i.e. whom they will consider as heirs of the estate, what shares they will divide the estate into or what conditions will govern the settlement of the estate. If the testator has left a will or asuccession inheritance agreement, the court commissioner will be bound by the testator’s expressed will when deciding on the distribution of the estate among the heirs. However, if the testator has not left a will or an inheritance agreement, the inheritance proceedings shall follow the legal succession. This generally brings other influences into the inheritance proceedings which may have a negative impact on the entire course of the process, particularly because of the unpredictable and dynamic relationships within each family and, consequently, between the individual heirs.
In our experience, inheritance proceedings may take more than 1 year even with a small estate. However, this time is proportionally longer with regard to the size of the estate, the number of heirs, the load of the court commissioner’s work, etc. In cases where there are conflicts between the various heirs, the probate proceedings may take many years.
In inheritance proceedings, the first step is the division of the common property of spouses, where the value of the deceased spouse’s estate at the date of his death is determined. Already at this stage, major disagreements may arise, which are similar to disputes over the extent and division of the common property of spouses in the event of divorce.
Once the extent of the estate (the assets and liabilities of the testator) has been determined, the court commissioner carries out steps to divide the estate into shares corresponding to each heir’s title. In this connection, we consider it necessary to point out that if there are several heirs among whom there are disputes, for example, as to the value of the estate, the capacity of the heir or the form of settlement, the court commissioner is not competent to assess the individual assertions and claims on their merits and will, as a rule, refer one of the parties to the inheritance proceedings to the competent court, which will give an authoritative ruling on the claims. During the decision-making of the ordinary court, the inheritance proceedings are suspended to the extent of the succession dispute and must await a final decision, which certainly constitutes a substantial delay in the settlement of the estate. It is therefore evident from the foregoing that, in the context of the probate proceedings, it is advisable to seek as far as possible an agreement between the various heirs, but we understand that this is not always possible.
What if there is no will?
As mentioned above, in the absence of a will (or an inheritance agreement), the court commissioner proceeds according to the legal succession.
In the case of intestate succession, the key factor is the classification of the heirs in a certain class of succession. The law distinguishes a total of six inheritance classes. The classification depends in particular on the degree of kinship of the heir to the deceased, with the descendants of the deceased being given priority over their ancestors. This means that the first class includes the heirs who are closest to the testator (the testator’s children and spouse inherit in the first class, the testator’s spouse, parents and cohabitant in the second class, etc.).
If no heirs inherit, even according to the legal succession, the inheritance is attributed to the state as ‘escheat’, but the range of related persons is so extensive in the classes of inheritance that an escheat is only possible in rare cases.
In practice, a will is the most widely used disposition of property upon death. By composing a will, the testators can effectively prevent or at least minimise possible property disputes between heirs after their death, as they set clear rules for inheritance and administration of the estate during the inheritance proceedings.
Of course, it is possible to take paper and a pen and draw up and sign your will (holographic will) with your own hand. However, unless these are exceptional cases, we do not recommend this solution, especially in view of possible disputes concerning the authenticity of the will that may be initiated by the heirs, illegibility, interpretative ambiguities, etc. Recently, we have encountered cases where the testator wrote their will in electronic form, signed it with their own hand and stored it in a safe place. Unfortunately, such a will made is to be considered invalid and as such would not stand up in inheritance proceedings. In order to be valid, a will must meet specific requirements imposed by law on its form.
In general, a written will is required, and the law distinguishes the following options:
- Holographic (handwritten) will – a will written in one’s own hand, with the handwritten signature of the testator, which is stored with the testator or a trustworthy person.
- Allographic will – a will that is written otherwise than by the hand of the testator (e.g. on a computer). It must be signed with the testator’s own hand in front of two witnesses present. These witnesses must attach their identification, signatures and a declaration that the testament contains the testator’s last will. The witness may only be a person over 18 years of age, of legal capacity, and may not be an heir, legatee or a person close to them or their employees. With that in mind, we consider it important to point out that it is often the heirs who are the witnesses, which also renders such a will invalid.
- Will in the form of a public deed (notarial deed) – a will drawn up before a notary in the form of a notarial deed is very difficult to challenge due to its status as a public deed. In addition, the will and its wording are drawn up by the notary as an entry in a non-public register (register of legal acts in the event of death) and it is therefore easy to trace when the will was made and in what exact wording.
- Will with concessions – a will intended for persons who, because of an event, find themselves in a situation where their lives are in immediate danger. This is, for example, an oral will, a will made before the mayor of a municipality, the commander of a naval vessel or an aircraft. Wills with concessions cease to be valid if the testator remains alive for a certain period of time after making such a will.
However, the will does not have to merely specify the distribution of property to the heirs. In a will, the testator may also make use of institutes which ensure that their will is actually interpreted and executed in accordance with their last wishes.
For example, we recommend that clients appoint one or more administrators of the estate in the will. This institute is particularly beneficial in situations where it is necessary to ensure the day-to-day administration of the assets contained in the estate (business corporations, real estate, claims, etc.), since the administrator of the estate administers the estate (or part of it) from the moment of death of the testator or from their appointment until the decision on the succession is issued. On more than one occasion, we have seen that because of the death of a managing director or shareholder (or both in the same person), the corporation and other assets have been paralysed for several weeks or months because there was no person who would be legally capable, at least to a limited extent, of acting and administering the ordinary affairs for the duration of the probate proceedings. The appointment of an administrator of the estate can also be made by the court commissioner in the context of inheritance proceedings, but this often occurs with a long delay after the death of the testator.
In addition, a system of substitution can also be set up in the will, whereby each heir can have a substitute to whom the right of inheritance passes and who becomes an heir in the event that the originally designated heir is unwilling or unable to become the heir for any reason.
A will can also be supplemented by other institutes offered by Czech law, such as a mandate (a binding instruction of the testator), a legacy (the person charged with the legacy hands over the object of the legacy to the legatee) or various conditions under which the heirs are entitled to the estate or lose the inheritance.
Do not forget the non-negligible heirs
A separate category of heirs is the so-called non-negligible heirs, the descendants of the deceased who are entitled to the legal share of the inheritance (non-negligible share). A non-negligible heir is entitled to at least part of the value of the estate (not a specific asset), even if not specified in the will.
In the case of minor descendants, this is at least three-quarters of the value to which they would have been entitled if they had inherited according to the legal succession, and in the case of adult descendants, at least one-quarter of the value of the legal share of the inheritance.
A non-negligible heir may be disinherited and their right to the non-negligible share excluded or reduced only in the cases provided for by law. For example, if they have not provided the testator with the necessary assistance at a time of need, have not shown genuine interest in the testator as they should have shown, have been convicted of a criminal offence committed under circumstances indicating their depraved nature or have led a permanently disorderly life.
However, the mere omission of a non-negligible heir in the disposition of property upon death does not result in their disinheritance (with exceptions, where it is necessary to prove that the conditions for disinheritance have actually been fulfilled). A non-negligible heir may be disinherited only by a deed of disinheritance, which requires the same formalities as a will.
Summary of our recommendations
We would like to point out our practical experience that encompasses many cases where families have become estranged even over assets of little value. We recommend that any person wishing to make arrangements for a sudden life event should make arrangements for the case of death and consider in detail how the future estate is to be dealt with and on what terms.
Summary of our recommendations for the testators:
- A will in the form of a public deed (notarial record) is the most reliable method of making a disposition of property upon death.
- An allographic will (a will made otherwise than by your own hand) is only valid if it is made in the presence of two witnesses who are not heirs or persons close to them.
- Solely the omission of a non-negligible heir in the will does not disinherit them.
- The will can be supplemented by a number of institutes offered by the Czech legal order, thus creating a coherent inheritance structure that will accurately reflect the will of the testator and protect as much as possible the property in the estate at least for the duration of the inheritance proceedings.
In conclusion, we would like to alert anyone who is thinking of securing their property in the event of death not to delay the drafting of a will. By composing a will, it is possible to avoid potential family disputes in the context of inheritance proceedings and, above all, to ensure effective protection of the assets and values built up during the testator’s lifetime, which may be significantly affected by the inheritance proceedings.
We understand that inheritance is a sensitive subject in itself and that each case must be dealt with on a completely individual basis. Due to our many years of experience, we are able to provide high-quality and comprehensive advice on the resolution of property and family relationships and their subsequent settlement and other dispositions. We will be happy if you turn to us with confidence.