What are compulsory portion penalty clauses?
Penalty clauses for compulsory portions are written into the will at the testator's request. This penalty clause stipulates that relatives who claim their compulsory portion in the event of the testator's death will incur certain negative legal consequences for the beneficiary of the compulsory portion. The purpose of the compulsory portion penalty clause is to prevent the estate from being financially burdened or overburdened by the assertion of the claim to a compulsory portion.
Example formulation:
„If one of the persons entitled to a compulsory portion of the first to die claims his or her compulsory portion against the will of the last to die, he or she and his or her descendants are excluded from succession upon the death of the last to die.“
Where does the compulsory portion penalty clause apply?
A compulsory portion penalty clause is used in Berlin wills when spouses initially appoint each other as sole heirs and, in the event of the death of the last surviving spouse, the children entitled to a compulsory portion are appointed as heirs. Legally, the children are disinherited in the first case of death, which is why they would theoretically have the opportunity to claim their compulsory portion.
Most frequently, the compulsory portion penalty clause stipulates that if the compulsory portion is claimed, the relative is disinherited in the second inheritance case. In this case, they have to decide whether they want to claim their compulsory portion in the first case or become an heir in the second case.
When does it make sense to use such a compulsory portion penalty clause?
The use of a compulsory portion penalty clause makes sense if the surviving spouse is to be protected from the financial burden of claiming the compulsory portion. In particular, if the descendants were not prepared to sign a waiver of the compulsory portion during the testator's lifetime, such a penalty clause should be considered.
Mandatory portion penalty clauses are also used to ensure a fair distribution of the total inheritance among all children.
The compulsory portion penalty clause can also protect against inheriting less than is actually possible. This is because it could happen that the inheritance has increased considerably after the death of the first testator and a waiver of the compulsory portions would mean a higher inheritance.
What should be considered when formulating penalty clauses for compulsory portions?
In particular, caution is required when formulating clauses penalising compulsory portions. When drafting a will with such a clause, it is particularly important to proceed carefully and precisely, as it can have a significant impact on the rights of succession.
Firstly, it is particularly important that the clause is formulated clearly and unambiguously. This is to avoid misinterpretations or disputes.
In practice, the following wording is often used: „Should one of the children assert claims to a compulsory portion after the death of their father as the first to die, they should also only be entitled to a compulsory portion after the death of the last to die.“ With this wording, it should be noted that the surviving spouse can be financially burdened not only by the enforcement of the compulsory portion claim, but also by the claim itself. The clause can therefore be formulated in such a way that claiming the compulsory portion already leads to disinheritance in the second inheritance case.
There is also a need for interpretation if the wording „demand“ is used. Theoretically, it may be sufficient for the compulsory portion penalty clause to apply that the beneficiary of the compulsory portion has only asserted claims for information. In its decision of 1 February 2022, the Higher Regional Court of Frankfurt ruled that if the wording of the compulsory portion clause is ambiguous, the mere assertion of claims for information is not sufficient to trigger the legal consequences of the compulsory portion penalty clause (ref. no.: 21 W 182/21, para. 19).
In addition, the extent of the binding effect must be clarified when formulating the compulsory portion penalty clause. For example, it is possible that a reconciliation may take place between the surviving spouse and the person entitled to the compulsory portion after the latter has demanded the compulsory portion. In some cases, it will be the wish of the surviving spouse that the child who claimed the compulsory portion after the death of the first deceased and is therefore affected by the penalty clause should nevertheless become an heir. However, in view of the binding effect of the joint will, this can no longer be enforced by amending the old will or drawing up a new one. Such an effect can be avoided by using the wording „against the will“ of the surviving spouse.
When formulating a compulsory portion penalty clause, it should also be borne in mind that this also applies if it is not the person entitled to the compulsory portion themselves but the social welfare organisation that claims the compulsory portion instead of the (disabled) child in the event of the first death. This was decided by the Higher Regional Court of Hamm in its judgement of 28 February 2013 (10 U 71/12). In view of such a case, it is therefore advisable to describe precisely in the wording of the clause in which cases the clause should apply.