Representation of high-net-worth families in inheritance disputes

Inheriting a Large Estate: Why It's the Calm Before the Storm?

If heirs start fighting over a company in court, its value drops daily. Employees get nervous, and suppliers and banks lose confidence. In such a situation, it's not enough to "win the dispute," as even victory is often a Pyrrhic one. The only rational strategy is to prevent the dispute from happening in the first place.

What Happens to Your Company When You Die? A Crisis Scenario

Imagine this scenario. You are the owner and sole executive director. The bank learns of your death (for example, from a death certificate) and immediately blocks the company accounts. Who will sign employee payroll? Who will pay suppliers?

A legal vacuum is created. Inheritance proceedings can take months, or even years in case of disputes. The company becomes unmanageable, even if it is otherwise healthy. The solution is prevention. A key tool you can use is the appointment of an administrator of the estate. You can do this in advance in the form of a public deed (a notarial deed). This administrator is authorized to act on behalf of the company and ensure its proper operation.

But beware. Ordinary "simple administration" only allows the administrator to "preserve" assets – pay wages, but not enter into new contracts or make strategic investments. For a thriving company, "simple administration" is ruinous because it prevents it from growing and responding to the market.

That is why the lawyers at ARROWS do not just draft a simple appointment. We will prepare documentation for you that entrusts the administrator with full administration and clearly defines their powers so they can actively manage the company without restrictions. We have been cooperating with a number of notaries for years and are specialists in corporate law. So you will have nothing to worry about.

How Can Inheritance Proceedings Threaten a Family Business?

The Most Common Battlefield: When a Will Is Not Enough

Many clients believe that drafting a will solves everything. Practice shows the opposite. A will is not the end of the discussion, but often its beginning. Disputes are not about whether a will exists, but whether it is valid, whether it was written under duress, or whether someone was unjustly omitted.

Disputes Over the Validity of a Will and Disinheritance

This is where a key legal term comes into play: the forced heir. These are your descendants. The law protects them, and they cannot be completely overlooked. Even if you bequeath everything to one person in your will, your descendants are entitled to a so-called compulsory share.

For an adult descendant, this is one-quarter of their statutory share, and for a minor, it is as much as three-quarters. And what about disinheritance? Yes, the testator can disinherit a descendant. However, this must be for statutory reasons: failure to provide assistance in need, persistent lack of genuine interest, leading a dissolute life, or committing a criminal act. Even a disinherited person has the right to file a lawsuit and challenge the grounds for disinheritance.

Interestingly, the law no longer requires the reason for disinheritance to be stated directly in the document. However, based on our twenty years of practice, we strongly recommend always stating and detailing the reason. This significantly strengthens the will against future challenges. Our Prague-based legal team will prepare documents that minimize the risk of being contested.

Disputes Over Gifts: Was Someone Favored During the Testator's Lifetime?

Another common battleground is gifts made during the testator's lifetime. A father had a son and a daughter. He gave the son a company worth 50 million during his lifetime. He gave the daughter nothing. After his death, only 10 million remains in the estate. Is only this 10 million divided?

Not necessarily. This is where collation, or inclusion in the inheritance share, comes into play. Under Czech legislation, a court may order that the value of the gift (50 million) be added to the value of the estate (10 million). Of the total 60 million, each would be entitled to 30. The son has already received 50, so he inherits nothing (but does not have to return anything).

Every large lifetime gift – real estate, money, a company share – is a ticking time bomb. The problem is that the intention of the donor, who can no longer say anything, is debated retroactively. Did the father want to favor the son, or was it just an "advance" on the inheritance?

Part of our work is to go through past gifts with you and legally address whether or not they should be included in the collation.

Do You Have Assets Abroad? Inheritance Proceedings Are Governed by Different Rules

For successful managers and investors, it is common to own property in Austria, have an account in Switzerland, or a share in a company in the USA. But this dramatically complicates inheritance proceedings. Which court will handle the inheritance? A Czech one? An Austrian one? Under which law?

Within the EU, the European regulation Brussels IV applies, which states that the law of the country of the deceased's "habitual residence" is applicable. For internationally mobile clients, however, "habitual residence" is a legal trap. What if you spend half the year in Prague and half in Dubai? Heirs can litigate the interpretation of this term for years in several countries.

Fortunately, this regulation offers an elegant solution: a choice of law (professio iuris). In your will, you can explicitly choose to have your inheritance governed by the law of your nationality (e.g., Czech law). This single strategic step saves our clients millions in international disputes.

For quick access to assets in the EU, the European Certificate of Succession (ECS) is used. It is a kind of "passport for inheritance" with which you can prove throughout the EU that you are an heir. Obtaining an ECS sounds simple, but practice shows that foreign authorities require specific wording. 

Thanks to our global network, ARROWS International, we handle these cases daily in more than 70 countries. We know the local requirements and will ensure a smooth transfer of assets, whether they are in the EU or the USA.

Cross-Border Inheritance Disputes

How to Prevent a War: Prevention Is Always Cheaper Than a Dispute

The best dispute is one that never starts. At ARROWS, we believe that prevention is always more effective and cheaper than dealing with the consequences. For owners of companies and large estates, we offer two key preventive tools.

Family Constitution: Clear Rules for Succession

For owners of family businesses, the key document is the Family Constitution. It is not just a legal scrap of paper, but a strategic family agreement. It defines the vision, values, and most importantly, clear rules of the game. It resolves the most explosive questions in advance: Who can lead the company (must they have an education or experience outside the company)? How will profits be distributed? What happens if one of the siblings gets divorced – will their share fall into the joint property of spouses? How will the value of a share be determined upon exit?

The Family Constitution is the best prevention against inheritance disputes over the company. When it comes to inheritance, all key issues have already been resolved and signed. The dispute is "deflated" before it can even begin. 

Mediation: When Court Destroys Even the Victor

If a dispute is already looming or has begun, court is not the only way. We offer mediation as an effective alternative. A lawsuit is public, expensive, and takes years. Mediation is discreet, fast, and significantly cheaper. The main advantage is that the goal of mediation is not a "winner and a loser," but an agreement acceptable to all parties. This often allows for the preservation of at least functional family relationships.

For corporate disputes, mediation has another advantage: it allows for creative business solutions. A court can only order the company to be sold or divided. In mediation, it can be agreed that one heir will take over the company and pay out the others, for example, from future profits, without having to indebt the company.

Our lawyers are also certified mediators and will help you find a solution that does not destroy the family or the company.

Why Entrust Inheritance Disputes to the ARROWS Law Firm?

Resolving inheritance disputes involving large estates requires more than just knowledge of the law. It requires business thinking, an international scope, and a sensitivity to family dynamics. We don't just solve one aspect. We provide a full service: from the preparation and revision of wills and family constitutions, through strategic legal consultations, to tough representation in courts and before administrative authorities.

We will secure the necessary licenses to continue operations, conduct expert training for your management on crisis scenarios, or draw up internal directives. Our experience is not just words. We have long been managing a portfolio of more than 150 joint-stock companies and 250 limited liability companies. We understand their needs because we deal with them daily. We are used to working quickly and to a high standard of quality.

Inheritance matters may require the cooperation of both a lawyer and a notary. That is why ARROWS recommends a consultation with a notary to clients, depending on the nature of their case, and cooperates with several verified notary offices. These include, for example, notary Silvie Dohnalová from Notářství Bruntál or Mgr. Tomáš Ostrožlík, alongside whom we also cooperate with other notaries. Clients can thus choose a suitable notary from the list of our cooperating offices according to their place of business or the locality where they need notarial services. In the case of important or more complex meetings, the notary can also, by agreement, come directly to the ARROWS law office, and the meeting can be handled jointly in one place.

We are also business partners. We are happy to listen to your business ideas and often connect our clients if we see interesting business or investment opportunities. Whether you are facing an acute dispute or want to protect your assets and company preventively, we are here for you.