Waiver of compulsory share in family businesses

Why waiving the compulsory share is one of the most important instruments of succession planning – and what pitfalls entrepreneurial families need to be aware of.

The right to a compulsory share of inheritance as an existential threat to family businesses

In many entrepreneurial families, the stake in the family business represents by far the largest asset. The company's value often exceeds the shareholders' private wealth many times over. However, German inheritance law stipulates that certain close relatives—especially children and spouses—can claim a monetary payment amounting to half of their statutory share of the inheritance, even if they are completely disinherited.

For family businesses, this can have dramatic consequences: If the estate consists primarily of the company shares and neither the estate nor the heirs' private assets contain sufficient liquid funds, the necessary sums must be taken directly from the company. In the worst-case scenario, the company must be sold to satisfy compulsory share claims – a scenario that can destroy the founder's life's work.

Compulsory inheritance claims are purely monetary claims. If the family business constitutes the largest part of the estate and no liquid assets are available, fulfilling these claims can jeopardize the company's very existence.

The waiver of compulsory inheritance as a protective shield

The solution provided by law is the waiver of compulsory share agreement pursuant to Section 2346 Paragraph 2 of the German Civil Code (BGB). Through such an agreement, which must be notarized, between the future testator and the person entitled to a compulsory share, the latter waives their future claim to a compulsory share.

This instrument is widely used in business succession planning and is part of the standard repertoire of proactive succession planning. A waiver of the compulsory share of the inheritance can be declared for consideration or without consideration. In practice, a waiver for consideration is the norm: The waiving party receives compensation – often in the form of a one-time payment, real estate, an annuity, or other assets. The compensation is typically proportionate to the expected compulsory share, but does not necessarily have to equal it in full.

A gratuitous waiver – that is, without consideration – is less common but legally permissible. The motives in such cases usually lie in familial ties: the person relinquishing their share wants to protect the family business, maintain family harmony, or avoid jeopardizing the succession of a sibling. These cases are particularly complex.

When a waiver becomes a point of contention: A practical example from the brewing industry

A high-profile case from the German brewing industry, heard before the Arnsberg Regional Court in 2025, illustrates just how explosive waivers of inheritance rights can be in practice. The situation is typical for entrepreneurial families and highlights the risks that arise when waivers of inheritance rights are made under unfortunate circumstances.

In this particular case, the son of a brewing dynasty, on the morning of his 18th birthday—according to his own account, exhausted and intoxicated—signed a notarized agreement waiving his compulsory share of the inheritance with his mother. He later claimed that the notary had merely presented the document without reading it aloud or explaining its legal consequences. The mother subsequently named her two daughters as her heirs in her will and disinherited her son.

More than 40 years after the waiver of his compulsory share of the inheritance was concluded, and around 30 years after the testator's death, the son filed a lawsuit. He sought a declaration that both the will and the waiver agreement were invalid. The court dismissed the lawsuit for several reasons that are insightful for practical application.

This case vividly illustrates that waivers of inheritance rights have repercussions for decades. What appears to be a mere formality at the time of signing can later turn out to be the loss of claims amounting to millions.

Typical points of attack against a waiver of compulsory share of inheritance

Those wishing to challenge a waiver of inheritance rights retroactively have several points of attack. In practice, the following lines of argument are particularly relevant:

Testator's incapacity to make a will

A will drawn up by a person capable of making a will is generally valid. The burden of proof lies entirely with the party claiming testamentary incapacity. In the brewery case described above, the plaintiff could not prove that his mother lacked testamentary capacity despite a serious cancer diagnosis. On the contrary, the fact that the testatrix had successfully managed the company as CEO until shortly before her death supported her testamentary capacity.

The courts place high demands on proving testamentary incapacity. A serious illness alone – even with brain metastases – does not automatically establish testamentary incapacity. The decisive factor is whether the person was capable, at the specific time of executing the will, of understanding the significance of their declaration and acting accordingly.

Immorality of the waiver

A waiver of inheritance rights can be challenged as immoral and therefore void if the circumstances of its conclusion offend the sense of decency of all fair-minded and just people. In practice, this is discussed, for example, in cases of a significant imbalance between the settlement payment and the actual value of the inheritance rights, exploitation of duress, or pressure exerted on very young individuals waiving their rights.

Proving immorality is, however, challenging. In the brewery case, the plaintiff offered only his own testimony as evidence – the weakest form of evidence, which also requires the opposing party's consent. Better evidence would have included witness statements from family members, friends, or notary staff.

Contestation of a will due to the omission of a person entitled to a compulsory share

Section 2079 of the German Civil Code (BGB) allows for the contestation of a will if the testator has omitted a person entitled to a compulsory share of the inheritance whose existence was unknown to him at the time the will was drawn up. In the brewery case, the son argued that his mother had mistakenly assumed the waiver of his compulsory share was valid and had therefore disinherited him. The court rejected this argument: The testatrix had deliberately intended to disinherit her son – regardless of whether the waiver of his compulsory share was valid or not.

Statutes of limitations as practical hurdles

Claims to a compulsory share of an inheritance are subject to a statute of limitations. Since the 2010 inheritance law reform, a three-year standard limitation period applies, beginning from the date the claimant becomes aware of the inheritance and the disposition affecting the share. Claims that arose before the reform expired no later than the end of 2013. In the brewery case, the lawsuit, filed more than 30 years after the inheritance, was therefore doomed to failure for this reason as well.

The reason for waiving the compulsory share:

Why the legal basis is crucial

A particularly interesting – and often overlooked in practice – aspect of the legal doctrine concerning the waiver of a compulsory share of an inheritance concerns the question of the legal basis (the so-called causa). According to prevailing opinion, the waiver of a compulsory share is an abstract disposition. This means that, as with any abstract disposition, it must be based on a contractual obligation – namely, the causa.

In the case of a waiver of inheritance rights for consideration, the matter is clear: the basis for the agreement is a consideration – typically a settlement payment. It is a perfectly normal synallagmatic (reciprocal) legal transaction.

The situation becomes more complex with a gratuitous waiver of the compulsory share of an inheritance. This is not a gift because the person waiving their share is not relinquishing an existing asset right, but merely foregoing a future opportunity. Instead, it is a legal transaction of its own kind (sui generis). The underlying reason lies in the waiving party's conscious decision to waive their future compulsory share for family reasons – for example, to secure the family business or to maintain family harmony.

The legal basis for a gratuitous waiver of the compulsory share of an inheritance is an intra-family one: The person waiving their share must be aware of why they are waiving it. If this awareness is lacking, the legal basis is also lacking.

Conditionality: An underestimated point of attack

If the legal basis for waiving the compulsory share is lacking, this has far-reaching consequences: The waiver of the compulsory share was then made without legal grounds and can be reclaimed – or condicted – according to § 812 para. 1 sentence 1 alternative 1 BGB (the so-called condictio indebiti).

This approach has a decisive advantage over the argument of immorality: It does not require a strict verdict of immorality. Rather, it suffices to demonstrate that the person waiving their rights was unaware of what they were waiving and why when they concluded the contract. This is quite conceivable, especially in the case of very young people waiving their rights – for example, if an 18-year-old signs a waiver of their compulsory share of the inheritance without understanding the implications.

The legal consequences of a claim for unjust enrichment vary depending on when it is asserted: If it is made during the testator's lifetime, the waiver of the compulsory share must be notarized. After the testator's death, only a claim for compensation for the value of the inheritance remains. Claims for unjust enrichment are subject to a three-year statute of limitations – the period begins when the claimant becomes aware of the circumstances giving rise to the claim.

Can a missing cause be subsequently remedied?

An intriguing follow-up question is whether a waiver of inheritance rights, initially lacking the necessary legal basis, can be remedied, in a sense, by subsequent actions of the waiving party. In the brewery case, it was argued that the plaintiff confirmed the waiver of inheritance rights four years later in a further notarized agreement. Could such a confirmation constitute the subsequent creation of a legal basis?

The prevailing view affirms the fundamental possibility of creating a legal basis retroactively. Several arguments support this: First, Section 812 of the German Civil Code (BGB) does not require that the legal basis already existed at the time of the disposition. Second, by analogy to Section 812 Paragraph 1 Sentence 2 Alternative 1 of the BGB, it follows that a legal basis that can subsequently cease to exist can all the more readily be created retroactively. And third, this follows from the general principle of freedom of contract.

In the case of a gratuitous waiver of the compulsory share of the inheritance, even a unilateral declaration of intent by the waiving party is sufficient – if necessary, implicitly and informally. The crucial point is that the waiving party later becomes aware of the reason for and the significance of their waiver and nevertheless maintains it.

In the case of a waiver of the compulsory share for consideration, the subsequent cause must be agreed upon with the testator (during his lifetime) or with his heirs (after the inheritance), since this is a bilateral legal transaction.

Practical recommendations for entrepreneurial families

Early and professional design

Agreements waiving inheritance rights should not be treated as a mere formality. They belong in the hands of specialized lawyers and notaries who not only understand the legal requirements but also consider the family dynamics. Thorough documentation of the notarization process—including reading aloud, providing legal advice, and verifying legal capacity—is essential.

Agree on a fair severance payment

A fair severance payment not only minimizes the risk of a legal challenge based on unconscionability, but also establishes a clear legal basis (causa) for the waiver. The amount should be based on the anticipated statutory share of the inheritance, but need not reach it in full. It is important that the severance payment is clearly justified and documented.

Special protection for young people who abstain

Particular care is required when dealing with waivers from young adults. The person waiving their rights must understand the meaning and implications of their declaration. It is advisable to give them sufficient time to consider the matter, to allow them to seek legal advice if necessary, and to thoroughly document the explanation of the consequences of the waiver.

Regular review of existing waiver agreements

Existing agreements to waive inheritance rights should be regularly reviewed as part of ongoing succession planning. If the financial circumstances change significantly—for example, due to strong company growth—adjusting the severance payment may be advisable to minimize the risk of future challenges.

Accompanying measures: Will and articles of association

Waiving one's compulsory share of the inheritance is only one component of succession planning. It should always be embedded in a comprehensive concept that also includes testamentary disposition, succession clauses in company agreements, prenuptial agreements, and, if necessary, a foundation solution. Only in this way can the long-term survival of the family business be secured for generations to come.

Conclusion

For family businesses, agreements to waive inheritance rights are of vital importance. They protect the company from liquidity drains upon inheritance and enable an orderly succession. However, as the brewery case vividly demonstrates, poorly drafted waivers can lead to decades of disputes, incurring not only substantial legal and court costs but also permanently damaging family harmony.

Of particular practical relevance is the approach based on the lack of a legal basis: If the party waiving their rights was unaware at the time of the agreement of what they were waiving and why, the legal basis for the waiver is lacking – and this can be reclaimed. This is a lower level of challenge than the argument of immorality and deserves more attention in legal advice.

Conversely, for entrepreneurial families planning their succession, this means that careful planning, appropriate compensation, and thorough documentation are the best protection against a successful challenge to the waiver of inheritance rights decades later. Invest in professional support for all parties involved – it is one of the most important investments in the future of your family business.