Settling an Estate: Do It Yourself or Seek Professional Help?

After a death, relatives are faced not only with grief and personal decisions. At the same time, numerous legal, tax-related and organisational matters must be clarified. Bank accounts and contracts need to be reviewed, insurance companies must be informed, assets must be secured and, where applicable, real estate, businesses or shareholdings must be managed.

This often raises the question:

Can I administer the estate myself, or should I seek professional support?

There is no universal answer. A straightforward estate with a clear line of succession, only a few assets and no apparent debts can usually be handled by the heirs themselves. However, matters become more difficult when real estate, business assets, foreign assets, compulsory share claims, several heirs or unclear liabilities are involved. The first essential step is therefore to obtain a complete overview. Only then can it be determined which steps are necessary, which risks exist and whether professional assistance would be advisable.

What Does Estate Administration Mean?

In general usage, estate administration refers to all measures required after a death to identify, secure, manage and ultimately distribute the estate in accordance with the order of succession or the deceased person’s instructions.

This may include, for example:

identifying the heirs,
securing documents and assets,
identifying bank accounts, securities accounts and insurance policies,
reviewing ongoing contracts,
recording real estate and business interests,
identifying debts and other obligations,
preparing an estate inventory,
fulfilling tax obligations,
settling legitimate estate liabilities,
clarifying compulsory share claims,
managing the estate within a community of heirs, and
finally distributing or dividing the estate.

The term “estate administration” is not a precisely defined statutory procedure. It describes the complete range of practical and legal tasks associated with an inheritance.

It must be distinguished from court-ordered estate administration under German law. This is a special judicial procedure primarily intended to separate the estate from the heir’s personal assets and to limit the heir’s liability to the estate.

Who Is Entitled to Administer the Estate?

Upon death, the deceased person’s assets generally pass as a whole to the heir or heirs. The heirs are therefore initially responsible for the estate.

The right of inheritance may result from:

a will,
an inheritance contract, or
the statutory order of succession.

If there is only one heir, that person can generally act alone on behalf of the estate. If there are several heirs, a community of heirs is automatically created by law. The estate then becomes the joint property of all co-heirs. However, this does not mean that each co-heir may freely dispose of individual estate assets. As a general rule, the estate must be managed jointly by the co-heirs. In the case of necessary measures to preserve the estate, one co-heir may, under certain conditions, also act alone. More extensive decisions, however, often require coordination within the community of heirs.

An executor may also have been appointed. In this case, the division of responsibilities between the executor and the heirs depends on the scope of the executorship. Before bank accounts are closed, real estate is sold or estate assets are distributed, it should therefore always be clarified who has actually become the heir and who is legally authorised to act on behalf of the estate.

The First Step Is to Clarify the Order of Succession

Practical estate administration should not begin with the distribution of individual items, but with clarification of the order of succession.

The following questions should first be examined:

Is there a will or an inheritance contract?
Has the testamentary disposition already been officially opened?
Could there be several wills?
Are the provisions clearly worded?
Does the statutory order of succession apply in whole or in part?
Has an executor been appointed?
Are there prior and subsequent heirs?
Are there compulsory share claims or legacies?

A certificate of inheritance is not always required. A notarised will or inheritance contract, together with the court record of its opening, can often serve as sufficient proof of inheritance.

In the case of privately written wills, more depends on the specific purpose for which proof is required and on the clarity of the provisions. In certain cases, banks may accept an officially opened handwritten will. Stricter requirements apply, however, when correcting the land register.

A certificate of inheritance should therefore not be requested automatically before it has been clarified whether it is actually needed. Particularly in the case of larger estates, the fees, which depend on the value of the estate, can be substantial.

Accepting or Disclaiming the Inheritance

Anyone who may be an heir should not immediately begin distributing the estate. It must first be examined whether accepting the inheritance makes economic sense or whether significant debts may exist. An heir generally assumes not only the deceased person’s assets, but also the estate liabilities.

These may include:

loans and other credit obligations,
outstanding invoices,
tax debts,
rent and service charge arrears,
liabilities arising from self-employment or business activities,
guarantees,
maintenance or repayment obligations,
legacies,
compulsory share claims, and
the costs associated with the inheritance.

An inheritance can only be disclaimed within a statutory time limit. As a general rule, this period is six weeks and normally begins when the heir becomes aware both of the inheritance and of the reason for being called to inherit. The period is extended to six months if the deceased had their last residence exclusively abroad or if the heir is abroad when the disclaimer period begins.

Because the disclaimer period often starts earlier than many relatives assume, it should be examined promptly whether disclaiming the inheritance may be appropriate. Once the deadline has expired, the inheritance is generally deemed to have been accepted.

A person who protects a property from damage, disposes of perishable items or prevents an immediate danger does not necessarily accept the inheritance merely by doing so. However, anyone who sells or distributes estate assets, or otherwise clearly acts as the final heir, may create legally relevant facts.

In the case of a complicated or potentially over-indebted estate, it should therefore be examined as early as possible which options for action are still available.

Secure the Estate First

Immediately after the death, the main priority is often to prevent damage to the estate.

Typical protective measures include:

securing the deceased person’s home, house or business premises,
recording all keys,
protecting vehicles and valuable items,
recording cash, jewellery and important documents,
arranging care for pets,
securing or disposing of perishable goods,
reviewing ongoing payment transactions,
preventing unauthorised access to bank accounts or digital user accounts,
informing insurance companies of the death, and
arranging necessary maintenance measures for real estate.

All measures taken should be documented carefully. This is especially important if there are several heirs or if compulsory share claims may later be asserted. Photographs, inventories, bank statements, receipts and written notes can help prevent uncertainty and disputes at a later stage.

Which Documents Should Be Located?

Complete estate administration is only possible if the deceased person’s essential documents are identified.

The following should be searched for in particular:

wills and inheritance contracts,
death certificates and civil status documents,
bank and securities account statements,
loan agreements,
insurance policies,
land register documents,
purchase, rental and lease agreements,
tax assessments and tax returns,
documents concerning businesses and shareholdings,
partnership or company agreements,
pension and retirement provision documents,
vehicle documents,
powers of attorney,
gift and transfer agreements,
documents relating to foreign assets,
login details and information concerning digital assets, and
evidence of substantial gifts made in recent years.

The last two points in particular are often underestimated. Digital bank accounts, online securities accounts, cryptocurrencies, domains, digital copyrights or balances held with payment service providers may have significant financial value. Previous gifts may also be relevant, for example in connection with supplementary compulsory share claims or inheritance tax.

Why an Estate Inventory Is Useful

An estate inventory is a structured overview of the deceased person’s assets and liabilities.

Even where there is no express statutory obligation to prepare a particular type of estate inventory, a complete assessment is almost always advisable.

It helps to:

assess the financial position of the estate,
compare assets and debts,
prepare for inheritance tax,
review compulsory share claims,
make the administration of a community of heirs transparent, and
prepare for the later distribution of the estate.

However, the term “estate inventory” is used in different legal contexts. Not every estate inventory therefore has the same legal meaning or effect.

What Types of Estate Inventories Are There?

Private Estate Inventory

A private estate inventory is normally prepared by the heir or with the heir’s assistance. It is used for a general assessment of the estate and may also form the basis for calculating compulsory share claims.

Notarial Estate Inventory

Under the conditions of Section 2314 of the German Civil Code (BGB), a person entitled to a compulsory share may request a notarial estate inventory instead of, or in addition to, a private inventory.

The notary does not merely reproduce the heir’s statements. The notary must investigate the estate independently and decide, in the exercise of proper professional discretion, which investigative measures are required.

The German Federal Court of Justice has emphasised that a notarial estate inventory is intended to provide a greater degree of clarity, transparency and accuracy. At the same time, the heir remains obliged to cooperate.

Estate Inventory Prepared by an Executor

After accepting the office, an executor must generally provide the heir without delay with an inventory of the estate assets subject to the executor’s administration and of the estate liabilities known to the executor.

Inventory in the Legal Sense of Inheritance Law

The statutory inventory is also a list of estate assets and liabilities. It is particularly relevant in connection with the statutory rules governing the heir’s liability.

These different forms must not be confused with one another. A self-prepared estate inventory does not automatically satisfy the requirements applicable to a notarial inventory or a statutory inventory.

What Should Be Included in an Estate Inventory?

A useful estate inventory should present the assets and liabilities of the estate separately and as completely as possible.

Assets

Assets may include:

bank balances,
savings books,
securities accounts,
funds and other investments,
cash,
real estate and land,
business interests,
claims arising from insurance policies,
vehicles,
jewellery, art and collections,
valuable household contents,
loan receivables,
tax refund claims,
rental deposits,
contractual claims,
foreign assets,
cryptocurrencies,
domains and digital assets,
copyrights and licensing rights, and
other receivables.

Liabilities

The liabilities side may include, for example:

bank loans,
private loans,
outstanding invoices,
tax debts,
funeral expenses,
costs of administering the estate,
outstanding rent and service charges,
compulsory share claims,
legacies,
claims for the equalisation of accrued gains,
maintenance obligations, and
other estate liabilities.

In compulsory share cases, so-called fictitious estate items may also be relevant, especially gifts previously made by the deceased.

Depending on the purpose of the inventory, it may not be sufficient simply to list the items. In many cases, values must also be determined as of the relevant valuation date or at least estimated in a transparent and comprehensible manner.

Must Every Individual Household Item Be Recorded?

Not every used everyday item has a significant financial value. Nevertheless, household contents should not be ignored as a whole. The relevant figure is the actual market value, not the original purchase price or the item’s sentimental value.

An ordinary used household generally has only a limited resale value. The situation may be different for high-quality furniture, jewellery, works of art, antiques, designer objects, watches, collections or technical equipment.

Especially in compulsory share cases, broad lump-sum categories should be avoided where individual items may clearly have substantial value. If there is uncertainty, an expert valuation may be advisable.

Identifying Bank Accounts, Securities Accounts and Insurance Policies

Banks and insurance companies should be informed of the death. At the same time, it must be clarified which bank accounts, securities accounts, safe-deposit boxes and insurance policies existed.

The account balance on the date of death should not be the only factor considered.

Earlier account statements may also be relevant for a complete assessment, for example where:

large withdrawals were made,
gifts are suspected,
assets were transferred,
supplementary compulsory share claims may exist, or
it is unclear whether particular assets belonged solely to the deceased.

In the case of joint accounts, it must also be examined who was economically entitled to the funds. The mere designation as a joint account does not always resolve the question of ownership.

Life insurance policies must also be examined separately. If a beneficiary has been validly designated, the insurance benefit may pass outside the estate. Nevertheless, inheritance-law or tax-related questions may still arise.

Reviewing Ongoing Contracts

A death does not automatically terminate every contract.

The following should therefore be reviewed, among other things:

rental agreements,
energy and telecommunications contracts,
subscriptions,
leasing agreements,
loans,
insurance policies,
maintenance and service agreements,
memberships,
employment or business contracts, and
contracts with digital service providers.

Some contracts end upon death, while others pass to the heir or may be terminated subject to special notice periods. Immediate termination is not always advisable. For example, buildings insurance may remain urgently necessary while a property is still part of the estate. Similarly, terminating business contracts without proper review may cause substantial damage.

Real Estate in the Estate

If the estate includes real estate, the requirements involved in administering it usually increase significantly.

The following matters must be clarified, among others:

ownership structure,
the current land register position,
existing land charges and loans,
insurance policies,
tenancy arrangements,
ongoing costs,
maintenance requirements,
tax value,
market value, and
future use or sale.

The land register is not corrected automatically. The heirs must provide the land registry with suitable proof of their legal succession. A notarised will or an inheritance contract, together with the record of its official opening, may be sufficient. A purely privately written will, however, generally does not qualify for this simplified form of proof.

Within a community of heirs, an individual co-heir cannot sell the property alone. Decisions regarding use, rental, financing or sale should therefore be coordinated at an early stage.

Business Assets and Shareholdings

Estate administration may be particularly time-sensitive where a business, sole proprietorship or company shares are involved. In such cases, inheritance law is not the only relevant area of law.

The following must also be examined, among other things:

company agreements,
succession clauses,
redemption or compensation provisions,
powers of representation,
commercial register entries,
banking powers of attorney,
employment relationships,
ongoing contracts and orders,
liquidity,
tax obligations, and
possible inheritance tax reliefs.

Inheritance law and company law may lead to different outcomes. A person may become the legal successor under inheritance law but may not automatically assume the deceased person’s position under the relevant company agreement. In the case of business assets, a combined legal and tax review should therefore be carried out as early as possible.

Do Not Overlook Inheritance Tax

An acquisition upon death may be subject to inheritance tax. As a general rule, a taxable acquisition must be reported to the competent inheritance tax office within three months after the beneficiary becomes aware of it. Statutory exceptions exist, particularly where the acquisition is based on a testamentary disposition opened by a German court or notary and the beneficiary’s relationship to the deceased is clearly established.

However, this exception does not apply, among other cases, where the acquisition includes real estate, certain business assets, certain company shareholdings or foreign assets.

The three-month notification must not be confused with the filing of an inheritance tax return. A tax return generally only has to be submitted when requested by the tax office.

Inheritance tax is not calculated solely on the basis of the gross assets. Certain estate liabilities may be deducted from the taxable acquisition. For this reason as well, a carefully maintained estate inventory is of major tax importance.

Taking Compulsory Share Claims into Account

Persons entitled to a compulsory share do not automatically become co-heirs. Instead, they generally have a monetary claim against the heir. To calculate the compulsory share, they require information about the composition and value of the estate. The heir who is obliged to provide information must therefore submit a complete and properly structured estate inventory.

Depending on the circumstances, valuations, supporting documents and a notarial estate inventory may also be requested.

Incomplete or contradictory information frequently leads to disputes. Particularly problematic issues include:

undisclosed bank accounts,
unclear cash withdrawals,
omitted gifts,
lump-sum valuations,
concealed foreign assets, and
unresolved ownership arrangements.

A superficial estate inventory may therefore create more conflict than it resolves.

Estate Debts and Personal Liability

One of the greatest misconceptions in estate administration is that an heir is automatically liable only with the inherited assets. In fact, an heir is generally liable for estate obligations. Without suitable protective measures, this liability may also extend to the heir’s personal assets.

German law provides various instruments through which liability may be limited. These include in particular:

court-ordered estate administration,
estate insolvency proceedings,
under certain conditions, the defence of insufficiency of the estate, and
other inheritance-law defences and public notice procedures.

The appropriate instrument depends largely on whether the estate is solvent, unclear, over-indebted or simply of low economic value. Anyone who becomes aware that the estate is insolvent or over-indebted must not simply wait. Under certain conditions, there is a duty to apply for estate insolvency proceedings without undue delay. A culpable delay may result in liability for damages towards estate creditors.

What Is Court-Ordered Estate Administration?

Court-ordered estate administration is a statutory procedure for limiting liability.

Once ordered by the probate court, the estate is legally separated from the heir’s personal assets. The heir’s liability for estate obligations is then generally limited to the estate.

Once the order is made, the heir largely loses the authority to manage and dispose of the estate personally. These tasks are taken over by the estate administrator appointed by the court.

The estate administrator’s duties include in particular:

securing the estate,
identifying assets and liabilities,
collecting receivables,
satisfying legitimate estate creditors,
administering the estate in an orderly manner, and
transferring any remaining surplus to the heir.

Estate administration is therefore not primarily intended to reduce the heir’s workload. Above all, it is a mechanism for protecting the heir against unlimited personal liability and ensuring the orderly satisfaction of estate creditors.

Can You Appoint an Estate Administrator Yourself?

A clear distinction must be made here.

An estate administrator in the statutory sense cannot simply be hired by the heir like an ordinary service provider. Estate administration must be ordered by the probate court. The court then appoints the estate administrator. The heir may apply for the order and may suggest a suitable person for the role. The final decision regarding the appointment, however, lies with the probate court.

As a general rule, there is no fixed statutory application deadline for an heir. However, where there are several heirs, estate administration can no longer be ordered once the estate has been divided. In addition, co-heirs may only submit the application jointly.

This must be distinguished from privately commissioned assistance with estate administration. Heirs may, of course, instruct a lawyer, tax adviser or another specialised professional to support them in administering the estate or, under an appropriate power of attorney, to carry out individual tasks.

However, such a person does not thereby become an estate administrator in the statutory sense. They act as the heir’s authorised representative or adviser. The heir’s legal position and responsibility generally remain unchanged.

This distinction in terminology is important:

Court-appointed estate administrator: appointed by the probate court, holds a legally regulated office and provides limitation of liability under inheritance law.
Private adviser or authorised representative: instructed by the heir to provide practical, legal or tax-related support with estate administration.

When Can Private Support Be Useful?

Not every estate requires professional assistance.

An heir can often manage the estate personally where:

the order of succession is clear,
only a few assets exist,
no real estate or businesses are involved,
no debts are apparent,
there are no compulsory share claims,
there is no international connection, and
all heirs are in agreement.

Professional support may, however, be advisable where:

the order of succession is unclear or disputed,
several wills exist,
a community of heirs risks becoming unable to act,
real estate or business assets are involved,
compulsory share claims are asserted,
an estate inventory must be prepared,
previous gifts need to be investigated,
foreign assets exist,
tax reliefs need to be reviewed,
the extent of estate debts is unclear, or
the heirs are unable to cope with the administration due to time constraints, lack of expertise or emotional strain.

The scope of support can be agreed individually. Possible services include:

a one-off legal or tax review,
preparing a step-by-step plan,
reviewing and organising documents,
assisting with the preparation of an estate inventory,
corresponding with banks, insurance companies and authorities,
reviewing compulsory share claims,
supporting a community of heirs,
preparing the inheritance tax return, or
comprehensively administering the estate under a power of attorney.

What Can a Privately Appointed Person Take Over?

The tasks that may be delegated depend on the professional qualifications of the appointed person, the scope of the engagement and the power of attorney granted.

Typical tasks may include:

organising documents,
recording assets and debts,
monitoring deadlines,
contacting banks and insurance companies,
obtaining information,
preparing an estate inventory,
coordinating valuations,
compiling tax documents,
identifying creditors,
documenting payments,
providing organisational support to a community of heirs, and
preparing the distribution of the estate.

Legal and tax advice may only be provided by professionals who are legally authorised to do so. Even a comprehensive power of attorney does not automatically remove the heir’s own duties. The heir should therefore remain able to understand which decisions have been made and which payments have been authorised.

Why Interdisciplinary Advice May Be Important

Complex estates can rarely be assigned to only one area of law. Real estate may involve inheritance law, land register law, valuation law and inheritance tax law. A business may additionally involve company law, tax law, employment law and possibly insolvency law. Foreign assets may raise questions concerning international inheritance law, foreign proof of inheritance, double taxation and foreign reporting obligations.

For this reason, it may be advisable not to divide estate administration into separate, unrelated measures, but instead to consider legal and tax issues together. A decision that is permissible under civil law may have adverse tax consequences. Conversely, a strategy motivated solely by tax considerations may conflict with the terms of the will or the interests of a community of heirs.

Common Mistakes in Estate Administration

Distributing Estate Assets Too Early

The estate should not be distributed prematurely before it has been clarified which debts, compulsory shares, legacies and taxes must be paid.

Underestimating Debts

Not all liabilities are immediately visible. Tax claims, guarantees, private loans or business risks may only become known later.

Effectively Accepting the Inheritance

A person who extensively disposes of estate assets before completing the necessary review may lose the ability to disclaim the inheritance.

Missing Deadlines

Particularly important deadlines include the disclaimer period, tax notification deadlines, court deadlines, limitation periods and contractual notice periods.

Mixing Estate Assets with Personal Assets

Payments should be documented transparently. Depending on the circumstances, a separate estate account may be advisable.

Failing to Consider Persons Entitled to a Compulsory Share

Distributing the entire estate may become problematic if compulsory share claims later have to be satisfied.

Selling Real Estate or Businesses Without a Comprehensive Review

A sale may jeopardise tax benefits or violate the provisions of a will or company agreement.

Acting Alone Within a Community of Heirs

Not every measure can be validly decided upon by an individual co-heir.

Using the Term “Estate Administrator” Incorrectly

A privately appointed adviser is not automatically a statutory estate administrator. Court-ordered estate administration is a separate legal procedure with far-reaching consequences.

A Possible Sequence for Estate Administration

A sensible sequence may look as follows:

Secure documents and assets
Important documents, keys, banking records and valuable items should be secured and documented.
Clarify the order of succession
Wills, inheritance contracts, statutory succession and any executorship must be reviewed.
Observe the disclaimer period
Before making far-reaching dispositions, the financial situation of the estate should be assessed on a preliminary basis.
Prepare a preliminary estate inventory
Assets and liabilities should be recorded as early as possible.
Identify creditors and ongoing obligations
Contracts, loans, taxes and other claims must be reviewed.
Assess the heir’s liability
In the case of unclear or over-indebted estates, measures to limit liability should be considered.
Fulfil tax obligations
Notification of the acquisition, possible tax returns and valuation issues should be dealt with in good time.
Clarify compulsory shares and legacies
Existing claims must be taken into account before the estate is distributed.
Manage or realise assets
Real estate, businesses, securities accounts and other assets are preserved, transferred or sold.
Distribute the estate
Final division should take place only after liabilities and necessary reserves have been clarified.

Administer the Estate Yourself or Seek Assistance?

The decision depends less on the total value of the estate than on its structure.

Even a small estate may be legally difficult if the heirs are in dispute, an unclear will exists or substantial debts are threatened. Conversely, a financially significant estate may be manageable if the circumstances are clearly documented, properly prepared for tax purposes and unambiguously regulated by a will.

Heirs should therefore ask themselves the following questions:

Is it clear who the heir is?
Do I know all of the assets?
Are all debts fully identifiable?
Are there compulsory share claims or legacies?
Are real estate, businesses or foreign assets involved?
Must special deadlines be observed?
Can the community of heirs make decisions jointly?
Am I able to document all transactions in a transparent manner?
Could my personal assets be at risk because of estate debts?

The more of these questions remain unanswered, the more advisable an early legal or tax review may be.

Obtain a Complete Overview Before Taking Action

Administering an estate involves much more than closing bank accounts and distributing assets among the heirs. Heirs assume rights, assets, obligations and risks. They must clarify the order of succession, secure the estate, record assets and debts, comply with deadlines and determine which claims must be satisfied before distribution.

A structured estate inventory often provides the most important foundation for this process. It creates transparency, facilitates tax processing and can help prevent conflicts with co-heirs or persons entitled to a compulsory share.

Not every estate requires comprehensive professional assistance. Where the circumstances are clear and manageable, heirs can complete many tasks themselves. However, where real estate, business assets, foreign connections, compulsory share claims, unclear debts or disputes within a community of heirs are involved, professional support may be advisable.

A clear distinction must be made between two forms of support: statutory estate administration is ordered by the probate court and is intended in particular to limit the heir’s liability. Private assistance with estate administration, on the other hand, may be commissioned directly by the heir.

The most important rule is therefore:

Do not distribute or dispose of estate assets prematurely. First clarify the order of succession, identify the estate in full, and review debts and deadlines. Only then should a decision be made as to which measures are required and whether professional assistance is needed.