Partition of Inheritance

Partition of Inheritance

When several persons enter an estate as heirs, they initially form a community of heirs. This arises automatically upon acceptance of the inheritance and continues without further regulation even after the decree of inheritance. After the decree of inheritance, the heirs are co-owners of all estate assets in proportion to their inheritance shares (§ 550 ABGB).
The partition of inheritance dissolves this community and grants each heir their share in sole ownership. It can be effected amicably through an inheritance partition agreement or, if no agreement is possible, judicially through an action for partition of inheritance.

The partition of inheritance is the dissolution of the community of heirs, in which each heir receives their share in sole ownership, either amicably or judicially.

Inheritance Distribution Agreement

The inheritance partition agreement is the pragmatic and usually fastest way to fairly divide an inheritance. It is a private law contract that can be concluded either before or after the decree of inheritance.

If it is concluded before the decree of inheritance, it legally refers to the heirs’ expectancy in the estate assets and only becomes effective upon the legal finality of the decree of inheritance. The conclusion can take place entirely out of court or be recorded by the court commissioner.

Note: If an inheritance partition agreement is to be concluded before the decree of inheritance, the heir must have already submitted a declaration of acceptance of inheritance in the probate proceedings. Only then will they obtain the necessary party status to effectively participate in the agreement.

The second option is particularly advantageous because the contract then acts like a judicial settlement and serves as an enforceable title. If minors or other protected persons are involved, the guardianship court must also give its consent.

If the agreement is concluded after the decree of inheritance, legal professionals refer to it as a partition agreement. Here, it is no longer about inheritance law, but about the concrete distribution of existing co-ownership.

Such an Agreement Offers not Only Legal Certainty but also Flexibility:

The heirs can specifically determine who receives which estate assets, avoid co-ownership, and minimize tax disadvantages. This is particularly useful if an heir has a strong personal or economic interest in a specific asset (e.g., a residential house, a business, or a valuable collectible).

Peter Harlander
Harlander & Partner Rechtsanwälte „Ein gut gestaltetes Erbteilungsübereinkommen verhindert nicht nur spätere Konflikte, sondern spart allen Beteiligten Zeit, Nerven und oft auch erhebliche Kosten.“

Action for Partition of Inheritance

If an amicable settlement cannot be reached, often the only recourse is to court. With an action for partition of inheritance, any co-heir can compel the dissolution of the community. The court decides how the estate is to be divided.
Three methods are possible:

• Physical partition, where the estate is physically divided (e.g., by surveying and dividing land parcels)
• Judicial sale and partition, where the assets are sold and the proceeds distributed
• Mixed partition, which combines both methods

However, judicial proceedings are often time-consuming and costly, which is why an amicable solution is clearly preferable from a practical perspective.

Peter Harlander
Harlander & Partner Rechtsanwälte „In vielen Fällen lässt sich eine gerichtliche Auseinandersetzung vermeiden, wenn frühzeitig anwaltliche Beratung in Anspruch genommen wird.“

Typical Process of an Inheritance Partition

The process begins with a complete inventory of all assets and liabilities. This is followed by a professional valuation, especially of real estate, company shares, or valuable collections. This valuation is crucial to enable a fair division.
Based on this, the heirs negotiate the allocation of individual assets. If an agreement is reached, the result is recorded in an inheritance partition agreement, which is then implemented, for example, through land register entries or the payment of equalization amounts.

Formal Requirements and Tax Considerations

Special formal requirements must be observed, especially for real estate or GmbH shares. Land parcels generally require a notarial deed or certified signatures.

From a tax perspective, the timing of the contract’s conclusion can also be crucial: For a tax-neutral partition of inheritance with regard to real estate transfer tax, the agreement must be signed before the decree of inheritance. Otherwise, both real estate transfer tax and real estate income tax may be incurred.

More Options since 2017

Since a legal amendment in 2017, not only inheritance partition agreements can be concluded with the court commissioner. The court commissioner also records agreements on care services and arrangements for the deferral of forced heirship claims.

The advantage: These agreements act like judicial settlements and are immediately enforceable.

We examine your situation, inform you about the legal and tax consequences, and prepare the necessary documents. We then refer you to the competent court commissioner, who formally records the agreement.

Your Benefits with Legal Assistance

A lawyer ensures that the partition of inheritance is not only fair but also legally and fiscally sound. They review inheritance shares, draft secure contracts, represent your interests in negotiations, and enforce claims in case of disputes.

Frequently Asked Questions – FAQ