Creditor Protection in Succession Law: a Comparative Analysis

In considering the position of the creditors of a deceased's estate, a number of different and conflicting interests are at stake. First, the will of the deceased must be respected. Secondly, the heir might suffer harmful consequences if the estate has a significant burden of debt. Thirdly, and conversely, in legal systems employing universal succession the deceased's creditors might suffer if the heir is insolvent. Fourthly, legatees will want to access their legacy as soon as possible. Finally, and depending on the legal system, the law might establish a number of forced shares for the benefit of close relatives of the deceased, such as the legal rights of the spouse and children in Scotland.⁴

It is important to be clear as to the meaning of “debts of the estate”, not just for reasons of terminological precision but also because of the practical consequences which follow.⁵ For example, if the concept of debts includes legacies, then, in a case where legacies exceed the estate assets, there might be a question as to whether this leads to the insolvency of the estate.

In comparative literature, it is common to distinguish between three types of debts in succession law. First there are the debts that already existed during the deceased's lifetime and which are not extinguished upon his death (so-called debts in a narrow sense). Secondly, there are the debts arising from the death, such as funeral expenses and the costs of administration of the estate. Thirdly, there are any testamentary obligations imposed by the testator on the heir or executor, notably the payment of legacies.⁶

This article focuses on the settlement of debts in the strictest sense: those debts which the deceased had while in life and which are not extinguished on death.

From the time of classical Roman law onwards, successio has meant taking up the legal position previously occupied by a different person: the heir steps into the shoes of the deceased.⁷ By means of a single act, goods, rights and obligations are acquired which in any other case would require specific and autonomous acts of transfer.⁸ This is commonly justified by saying that the heir is regarded as continuing the personality of the deceased.⁹

According to the Romanist tradition, succession causes a fusion of two different patrimonies: the heir's patrimony and the deceased's patrimony. The result is a single patrimony that is liable to the creditors of the deceased and also to the personal creditors of the heir.¹⁰ Sometimes this fusion has consequences that are unjust and harmful, not only for the heir but for creditors as well. Thus, where a solvent person's estate devolves upon an insolvent heir, the deceased's creditors are faced with competition from the heir's own creditors.¹¹ Conversely, where an insolvent estate devolves upon a solvent heir, it will be the latter's creditors who will face competition from the deceased's creditors.

This fusion of patrimonies also causes the fusion and consolidation of any personal rights and limited property rights which the heir and the deceased had with respect to each other. For instance, in the case of an estate that consists only of personal rights against the heir, or of limited property rights over assets belonging to the heir, the extinction of these rights due to the fusion of patrimonies is harmful to the creditors of the estate.¹²

In classical Roman law, the only protection available to heirs was to disclaim the inheritance, and it was not until the time of Justinian that the unlimited liability assumed through succession could be avoided, restricting liability to what was received in the estate. This was by virtue of the “benefit of inventory”,¹³ introduced by a constitution of the year 531.¹⁴ Under this procedure the heir made an inventory of the estate with the assistance of a public official (the tabellarius) or of three witnesses, and giving the creditors the opportunity of being present. Thereafter the heir's liability was restricted to the value of the estate assets as specified in the inventory. If, however, the heir intentionally caused the inventory to be incomplete, he became liable with his own assets for double the amount of the value of the property concealed. Moreover, the restricted liability was pro viribus hereditatis and not cum viribus hereditatis: the creditors of the estate could therefore seize personal assets of the heir, as long as these did not exceed the value of the estate.¹⁵

As regards the creditors of the estate, the risks attached to the fusion of patrimonies could be avoided, since classical Roman times, through the so-called “benefit of separation”.¹⁶ Where the deceased's creditors were threatened by competition from the creditors of an insolvent heir, they could apply for a separation of the estate from the personal patrimony of the heir (separatio bonorum). The estate was then sold (venditio bonorum),¹⁷ and the creditors of the deceased were paid the full amount of their claims.¹⁸

This Romanist tradition of personal liability contrasts with medieval German Law according to which liability was always limited to the estate assets. The estate was regarded as a separate patrimony, not fully belonging to the heir before the debts were paid. Therefore, though the property of the deceased devolved upon the heir immediately on the death, the heir was properly entitled only to the residue. The first duty of heirs was to administer the estate, to pay debts and legacies, and only then were they allowed access to what remained.¹⁹ Only by violating these rules could they incur personal liability towards the creditors and legatees.²⁰

These Romanist and Germanic origins are the basis for the main models for the settlement of claims in modern systems of succession law. From the perspective of comparative law, a distinction is usually made between two principal models.