We are in an era in which the so-called phenomenon of language perversion occurs very frequently, which consists of changing words in order to replace the reality they define with a fantasy that is more comfortable and favorable to us, or as Umberto Eco says, the desire to control the meaning of words to adjust them to our interests.
Perversion is especially common in the legal world, and that is why the mission of the jurist is to find the legal nature of the relationships that are submitted to him for opinion (in the case of lawyers or notaries) or judgment (in the case of judges) and to fit them into some of the general legal categories.
I have encountered this phenomenon of linguistic perversion, although I must say that it is not without any bad intentions, in recent times, on a recurring basis, from people who were looking for or believed they had found the formula to avoid paying the debts of an inheritance.
The argument was very simple, but fallacious. If the heirs are responsible for the debts of the inheritance, if we distribute the entire inheritance in legacies, since there are no heirs, there will be no one to answer for them..
In the notarial field, rather than long arguments that can be difficult to understand for people who are not experts in law, I have always believed that a policy of short phrases is better, which are then better remembered and As the title of this entry says ““better pay than inherit”, It helps us to explain that what is inherited is the liquid part of the inheritance, that the creditors are the first to have rights over the assets of an inheritance, and that this preference affects, to a greater or lesser extent, all the heirs and legatees.
Based on this assumption, and with special reference to Catalan law, we will try to explain what happens and what can be done when there are debts in the inheritance.
Although it is not directly detailed in any legal provision, the order of preference regarding the assets left by a person upon his death is as follows:
1.- Creditors of the deceased.
2.- Legitimate heirs and other persons with a legal right to the succession (e.g. spouse or partner creditor of the widow's fourth inheritance)
3.- Legatees.
4.- Heirs.
5.- Private creditors of the heirs.
Therefore, the first mission that corresponds to those interested in an inheritance is an assessment of their assets (assets) and obligations (liabilities), that is, to know what there is and how much it is worth, and based on this, make the most appropriate decisions, such as:
1.- Give it up.
2.- Accept it, if we know that the asset is superior to the liability.
3.- Or we may be forced to request bankruptcy proceedings for the inheritance, if the liabilities are greater than the assets.
To explain the different assumptions we will start from the following example, very common in recent times:
Father (A) makes a will, leaving his son (B) the legitimate share, to this son (B`) a flat valued at 50 um and naming the other son (C) as heir, in the rest of the inheritance worth 50 um
The fact of leaving a flat to the grandson is because the son (B) has his own debts, and as a formula to ensure that what he may inherit is not taken from him (this is what is commonly known as passing on an inheritance, and which is perfectly legal)
THE RENUNCIATION OF THE INHERITANCE.
Many people believe that by renouncing all the problems of an inheritance with debts will end, thinking that the State will then keep everything. Unfortunately, things go in a different direction, because we must remember that there will always be an heir, so that if we renounce, in most cases we will pass the problem on to others, who will most likely be the children of those who have renounced, since the State only ends up inheriting, in the absence of collateral relatives up to the 4th degree (at least in the law of Catalonia and in the Civil Code).
It is very difficult to give general rules, since everything depends, in the case of a will, which is what is foreseen, via substitutions for cases of renunciation, whether or not any right of accretion is applicable, or on who the closest relatives of the next degree are, in the case that there is no will.
What should be highlighted is that the renunciation of an inheritance is irrevocable, so we cannot go back on what we have said.
As everything is better understood with examples, I will say that a few months ago, some gentlemen believed they had a poisoned inheritance, since there was no money in it to pay the high inheritance tax, and since not all of them had their own money to do so, they decided to give up. Well, they have recently received a communication from the Junta de Andalucía, requiring them to say who their descendants are in order to deal with them, as possible heirs.
ACCEPTANCE OF THE INHERITANCE.
If there are no creditors in the inheritance, the hereditary assets must be distributed among the various interested parties, in the manner provided for in the will, or in the absence of this, in the proportion resulting from the law.
That is, from the order of preference that we have indicated, we eliminate the creditors of the deceased, because there are no debts, leaving the order of interested parties as follows: 2.- Legitimate heirs and other persons with a legal right to the succession. 3.- Legatees. 4.- Heirs.
Therefore, the only limitations that exist for this distribution derive from the obligation to pay the legitimate portions, which falls on the heir(s), and for whose payment, it may be necessary to reduce the legacies.
Starting from the previous example.
Value of the inheritance. 100 um. In Catalonia the amount of the legitimate shares is 250 um (25%) to be shared among all the children. The grandson (B´) would receive the flat for 50 um, and the son (C) would keep the rest, after paying his brother (B) the legitimate share of 12.5 um, that is, 37.5 um.
If the flat were worth 90 um, then there would not be sufficient assets to pay the legitimate shares of (B) and (C), and as legitimate heirs have preference over legatees, the grandson would have to pay his father and uncle part of the value of the flat or agree that they would be awarded a part of it, in the amount necessary to cover his legitimate share..
THE BENEFIT OF INVENTORY.
Very fashionable in recent times, the benefit of inventory is intended for those cases in which, having inheritance debts, the amount of these is less than that of the hereditary assets.
Through the benefit of inventory, we ensure that the debts of the inheritance are paid only from the hereditary assets, but that they do not affect the heirs' own assets. In this way, the hereditary assets act as a limit to the creditors' claims.
In Catalonia, there is not strictly an acceptance with the benefit of inventory. Acceptance of the inheritance entails the benefit of inventory, provided that it is carried out under certain conditions (article 461-15 CCCat); but if these conditions are not met or the person acts fraudulently (hiding assets), as a sanction, the heir will be liable for the debts of the inheritance, with his own assets in addition to the assets of the inheritance.
Article 461-20 CCCat tells us: “The acceptance of the inheritance with the benefit of inventory produces the following effects: a) The heir is not responsible for the obligations of the deceased or for the hereditary burdens with the own assets, but only with the assets of the inheritance. b) The rights and credits of the heir against the inheritance, for which payment may be made, and the obligations of the heir in favour of the inheritance, shall continue to exist without being extinguished by confusion. c) Until the debts of the deceased and the hereditary charges have been fully paid, the assets of the inheritance may not be confused with the heir's own assets to the detriment of the hereditary creditors or the heir.
Enjoying the benefit of inventory does not prevent one from acting as the owner with respect to the inherited assets, but it does require, in return, taking an active disposition with respect to the debts, since before delivering or fulfilling the legacies, the heir must pay the known creditors of the deceased. He could also appoint an administrator or request his appointment from the judge.
The form and method of paying creditors is not regulated by law., but will require either the sale of inherited assets to obtain liquidity or an agreement with creditors through reductions, delays or allocations of assets, or between heirs to pay debts.
Continuing with the previous example:
Value of the inheritance. 100 um, but has debts for 50 um. In this case, the heir must agree with the creditors how these debts are paid, for which all the assets of the inheritance are responsible, so that only 50 um can be distributed, which means that the grandson (B') could not receive the entire apartment, having to bear the payment of the legitimate shares of his father (B) and uncle (C) which amounts to 12.5 um. In other words, the grandson would only receive 37.5 um.
And in the event that once some or all of the legatees have been paid, unknown hereditary creditors appear and the hereditary remainder is not sufficient to pay them, these creditors can take action against said legatees, that is, request the seizure of such credits to obtain payment of their debts.
THE INHERITANCE COMPETITION.
When the liabilities of the estate are greater than the assets, the law imposes the obligation to request bankruptcy of the estate.
Continuing with the previous example:
Value of the inheritance. 100 um, but it has debts for 110 um. In this case, the debts cannot be paid with the assets of the inheritance. The options that the heir would have are to pay them out of his own pocket, or to request bankruptcy as a guarantee for the creditors.
Through the application for bankruptcy, a bankruptcy administrator would be appointed, who would be responsible for attempting to reach an agreement with the creditors, or liquidating the inheritance in an orderly manner, under judicial control.
