When is an heir liable for the decedent's debts, and how can this be avoided?

You will learn what happens if an heir does not exercise the reservation of inventory or if creditors do not register their claims in time, and what the consequences of rashly accepting an over-indebted inheritance can be. 

Must an heir pay the deceased's debts?

The general rule is: Yes. An heir steps into the rights and obligations of the deceased. This means they take over not only the deceased's assets but also all their debts. The current Czech Civil Code explicitly states that an heir is liable for the deceased's debts in full, even beyond the value of the inherited assets.

In other words, if you inherit assets worth CZK 100,000, but the deceased had a debt of CZK 150,000, creditors can demand the full CZK 150,000 – the heir must pay the debts even from their own pocket if the value of the debts exceeds the acquired assets. At this point, it is also important to note that the notary is not required to investigate the deceased's debts, only all their assets. This means that even after the inheritance proceedings are concluded, debts for which you will be liable may still surface.

So, debts are indeed inherited, and you cannot automatically escape them. Although Czech legislation provides for minor exceptions (e.g., some personal obligations cease upon death), the vast majority of the deceased's financial commitments pass to the heir. It is therefore crucial to ascertain the state of the estate right at the beginning of the inheritance proceedings – what assets and what debts the deceased left behind.

The court-appointed notary, who always identifies and records the deceased's assets and known debts (the so-called inventory of the estate), can help with this. From this preliminary inventory, you can get an idea of whether the debts exceed the assets. If it seems that there are more debts than valuable assets, or that the deceased was even subject to enforcement proceedings, it is time to be vigilant and take steps to protect yourself from an over-indebted inheritance.

Beware of multiple heirs: If more than one heir acquires the inheritance, it still holds that each of them is liable for all of the deceased's debts (it is not the case that each pays only a proportional part according to their share – a creditor can demand the entire payment from any of the heirs). Creditors even have the right to choose whether to claim the entire debt from all heirs jointly or, for example, from just one of them.

The heirs can then settle matters among themselves, but externally, towards the creditor, they are jointly and severally liable for the obligations. This situation can be very disadvantageous for an individual heir – one may end up paying everything and then have to laboriously claim the shares from the others. Fortunately, under Czech legislation, there are legal options to mitigate or completely avoid the heirs' liability for debts.

Disclaiming the inheritance vs. reservation of inventory: how to protect yourself from debts?

If you are concerned that the estate is over-indebted (debts exceed assets), do not be afraid to act proactively. The law gives you two main options to avoid having to pay the deceased's debts beyond the value of the inherited assets:

Disclaiming the inheritance: The first and most radical option is not to accept the inheritance at all. An heir can disclaim the inheritance by an express declaration to the notary acting as a court commissioner. By disclaiming, you renounce the entire estate – you receive no assets, but you also do not have to pay any of the deceased's debts. It is a simple and sure way to avoid problems with debts. Be aware: You must disclaim within 1 month from the day the court/notary informed you of this right (if you live abroad, you have 3 months). Once you disclaim, it is irrevocable – you cannot change your mind later. You also cannot disclaim only part of the inheritance; you either disclaim the entire inheritance or nothing.

Accepting the inheritance with a reservation of inventory of the estate: The second option, if you do not want to miss out on the inheritance (e.g., due to valued property), is to accept the inheritance but exercise the so-called reservation of inventory of the estate. In layman's terms, you request a list of all the deceased's assets and liabilities, thereby ensuring you are only liable for debts up to the value of the acquired inheritance. You do not disclaim the inheritance, but you legally limit your liability.

You will still have to pay the debts, but only up to the amount you inherited – no more. If the debts exceed the assets, it doesn't matter – you, as an heir with a reservation of inventory, will not end up in the red. A situation may arise where all the inherited assets are used to pay off debts (leaving you with nothing), but you will not have to pay more out of your own pocket (you will not go into personal debt). In legal terminology, this was formerly known as beneficium inventarii (the benefit of inventory).

It is important that you exercise the reservation of inventory in time – just as with disclaiming, there is a 1-month deadline from being notified by the court (this can be extended to 3 months for serious reasons or if residing abroad). You can make the declaration to exercise the reservation in writing or orally for the record before the notary. If you miss this deadline or explicitly declare that you will not exercise the reservation, you cannot take it back later. If there are high debts in the estate, we recommend always combining the reservation with a convocation of creditors! This is extremely important.

In practice, the notary must inform you of both these options (disclaiming or reservation of inventory) at the very beginning of the inheritance proceedings. However, the notary is not your personal legal advisor – they only inform you of your rights. The decision is yours. Therefore, carefully consider whether to accept the inheritance, and if so, whether with or without limited liability. The deadlines are short, and your choice is final. Both disclaiming and exercising the reservation of inventory cannot be revoked, nor can a declaration that you are not exercising the reservation.

What exactly is a reservation of inventory of the estate and how does it protect the heir?

A reservation of inventory of the estate means that, at the heir's request, a detailed inventory of the deceased's assets and debts is made, thereby limiting the heir's liabilities. This instrument is enshrined in the Czech Civil Code, and its purpose is to protect the heir from unexpected debts. If an heir properly and timely exercises the reservation of inventory, they are liable for the deceased's debts only up to the value of the inherited assets. In practice, this works by the notary (as court commissioner) having all assets and known liabilities of the estate appraised and listed.

This determines the net value of the inheritance, and any debts are paid from these assets. The heir is not liable to creditors with anything other than what they inherited. If the debts exceed the assets, they are paid proportionally (each creditor receives a part), or the estate is liquidated – see below. An heir with a reservation of inventory will not have to pay the difference out of their own pocket. However, it is important to be sure that there are no unknown debts hanging around that were not paid proportionally like the other registered debts.

It is important to know that the reservation of inventory only protects the heir who exercised it. If there are multiple heirs and at least one exercises the reservation of inventory, they will be liable for debts to a limited extent (only up to the value of their inheritance share), but the other heirs who did not exercise the reservation will be liable for the debts without limitation – in full, i.e., even for a value exceeding the acquired inheritance.

Therefore, the heirs should agree among themselves and ideally all exercise the reservation of inventory if there is a risk of the estate being over-indebted. If, for example, one of five heirs does not exercise it, a creditor could theoretically demand the entire debt from that single heir – who could then subsequently claim proportional contributions from the other four (who had the reservation). This situation is complicated, so it is better to avoid anyone neglecting the reservation.

Exercising the reservation of inventory also has its limits. It only protects against debts that were identified and dealt with during the inheritance proceedings. It may happen that after the inheritance proceedings are concluded, another of the deceased's debts comes to light, which no one knew about (typically a forgotten loan, a guarantee obligation, etc.).

Even an heir who had a reservation of inventory is then liable for such a newly discovered debt. They are even obliged to satisfy this creditor at least to the extent that their claim would have been covered in a so-called liquidation of the estate. This may mean that the heir will have to pay part of the debt from their own assets if they have already used up all the inherited assets for other debts. The "brake" in the form of the inventory does not apply if the debt appears later. Nevertheless, there is a solution to protect against such subsequently discovered debt surprises – that solution is the court's convocation of creditors.

Inheritance matters may require the cooperation of both a lawyer and a notary. Therefore, depending on the nature of their case, ARROWS recommends that clients consult with a notary and cooperates with several verified notary offices. These include, for example, notary Mgr. Silvie Dohnalová or Mgr. Tomáš Ostrožlík, alongside whom we 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 location where they need notarial services. For important or more complex matters, the notary can also, by agreement, come directly to the ARROWS law firm, and the matter can be handled jointly in one place.

Convocation of creditors – a public notice for creditors to register their claims

Another useful tool to insure against hidden debts is the so-called convocation of creditors, or summoning creditors through the court. This is a procedure regulated by the Czech Civil Code (§ 1711–1712) and is carried out only at the request of an heir (or the administrator of the estate) before the inheritance proceedings are concluded. The condition is that the heir has exercised the reservation of inventory – without it, a convocation of creditors cannot be proposed. If you are concerned that there are some unknown debts (e.g., the deceased may have had debts you don't know about), propose a convocation of creditors to the court.

The notary (as court commissioner) will then issue a resolution, which is a public notice posted on the court's official notice board for at least 30 days. The notice is also delivered directly to known creditors. In the notice, the court sets a deadline (a minimum of 3 months) during which creditors can register their claims and substantiate them. This officially determines what debts encumber the estate so they can be accounted for.

The convocation of creditors serves to protect the heir. Thanks to it, it should not happen that after the inheritance is settled, an "unexpected creditor" – some forgotten creditor – appears and wants to be paid. Or rather, the heir will be able to defend themselves by stating that they conducted the convocation. The heir is not obliged to satisfy creditors who did not register their claims in time during the convocation. Specifically, the law states that a creditor who does not register within the specified period has no right to payment of the debt from the heir if the estate has been exhausted by paying the claims of those creditors who registered in time during the convocation.

In practice, this means: registered creditors will be satisfied (either in full or proportionally, depending on the value of the assets), and if someone who did not register within the convocation period comes forward later, they are out of luck – they will get nothing if there is nothing left in the estate.

Those who do not register will no longer have the opportunity to claim payment of debts later. The assets that remain after all debts have been paid will be yours without any further risk. In other words, thanks to the convocation of creditors, you will know where you stand – it will reveal all claims, and those that remain hidden can no longer be claimed from the heir after the deadline has passed, provided the assets were used for the registered ones.

It is good to know that the convocation of creditors does not protect against all situations. For example, it does not apply to secured creditors (those who have a lien on the deceased's property – they will be satisfied from the sale of that collateral, even if they did not register). Also, if the heir knew about a certain debt, they cannot then claim that the creditor was not registered – a creditor of whom the heir was demonstrably aware can claim the debt even afterwards. However, in the vast majority of common cases, the convocation provides the necessary peace of mind. After the proceedings are concluded, the heir does not have to pay unregistered creditors and can calmly take possession of a clear inheritance.

What if you don't request an inventory (don't use the reservation)?

The decision to have an inheritance confirmed without a reservation of inventory should be a considered one. As described above, if an heir does not exercise the reservation of inventory, they are liable for the deceased's debts without limitation – in full. You should only consider this in a situation where you are absolutely sure that there are no significant debts.

Typically, this might be the case with grandparents whose assets and liabilities you have a perfect overview of (and perhaps they had no loans). In all other cases, the rule is: better safe than sorry – it is better to exercise the reservation of inventory. Some people are afraid of this administrative step, but the notary is there to arrange the inventory, and it does not fundamentally cost you any extra fees. If you do not do the inventory and a debt later surfaces, it will be too late to deal with it.

What exactly is the risk if an additional debt appears and you did not have a reservation of inventory? The creditor can demand its full repayment from you, even if it means dipping into your personal assets. Moreover, you will lose the option of using the convocation – this is not done without a reservation, so that creditor can easily come along a year after the inheritance is settled and still claim the money, plus interest, from you. This is a big difference compared to the situation where you used the reservation and convocation – there, a late creditor would no longer get their money.

Summary: Not using the reservation of inventory and convocation can expose you to the risk of a lifetime of repaying the deceased's debts. Only do so if you are truly convinced that no such risk exists.

What if creditors don't register their claims in time?

For an heir, the ideal situation is when, after a convocation of creditors has been carried out, all relevant creditors register their claims within the deadline – you then have certainty that you will settle with everyone at once within the estate. However, it sometimes happens that a creditor misses the deadline (perhaps they overlooked the debt, failed to react in time, or did not know about the death).

What does this mean for you? If the estate's assets were fully exhausted to pay the registered creditors, a late creditor has no claim against you. In practice, such a creditor would be left empty-handed – the heir can object that the creditor should have registered the claim during the convocation and, because they failed to do so, they are out of luck. This applies provided the heir acted prudently – exercised the reservation of inventory and proposed the convocation of creditors.

But there is one "what if": If, after paying the registered debts, there was still some value left in the estate (some assets), then a late creditor could theoretically claim satisfaction at least from this remainder. This is why, in practice, over-indebted inheritances are often handled by exhausting all assets to pay debts or by proceeding directly to the liquidation of the inheritance (the court orders all assets to be used to pay debts, leaving nothing for the heirs). This way, late creditors have nothing to claim from. For an honest heir who conceals nothing and cooperates with the notary, the convocation is therefore an effective protection.

Conversely, if the heir did not use the reservation of inventory and convocation, then no protective period exists – any creditor can assert their claim at any time, the standard statutes of limitation apply, and an heir who accepted an over-indebted inheritance without limitation is subject to all debts without limitation in time or scope.

Practical examples: when an heir rashly accepts an over-indebted inheritance

Let's look at what can happen when an heir underestimates the situation and accepts an inheritance with debts without using the available defenses. For example, Mr. Karel inherited the family house after the sudden death of his uncle. In his euphoria at acquiring a valuable property, he signed before the notary that he accepted the inheritance and explicitly did not exercise the reservation of inventory. Soon after, however, he discovered that his uncle had an outstanding loan, a signed promissory note, and credit card debt.

In total, the amount exceeded the value of the house. Because Mr. Karel did not request an inventory, he had to pay the debts in full – he raised part of the money by selling the house and paid the rest out of his own pocket. If he had exercised the reservation of inventory with a convocation, he would have paid only up to the value of the house and no more. Thus, due to his lack of knowledge, he found himself in personal financial trouble.

Rashly accepting an over-indebted inheritance can have long-term and serious consequences. The heir may find themselves without assets, with debts, or even in insolvency. Younger or more vulnerable heirs (those who have just come of age, seniors) can particularly end up with a burden of debt that will fundamentally complicate the start of their lives.

In conclusion: what to watch out for and when to seek legal help

The key advice is this: before accepting an inheritance, always assess the risk of debts. Do not succumb to pressure to quickly sign that you are taking the inheritance without knowing everything it contains. Find out as much information as possible – the notary will provide you with an overview of known assets and liabilities. If you suspect that the deceased may have been in debt, consider disclaiming or at least accepting the inheritance with a reservation of inventory. It is better to exercise the reservation even as a precaution if you are not certain about the deceased's financial situation. Disclaim the inheritance if it is clear that the debts significantly exceed the assets and you have no sentimental attachment to it – this will save you a lot of trouble.

Do not hesitate to request a convocation of creditors when dealing with a more complex estate with possible hidden debts. This will prevent someone from coming forward with a debt you had no idea about a few years after the inheritance is settled. Remember that you must submit all these requests (disclaimer, reservation, convocation) within the statutory deadlines, otherwise you will lose the right to them.

When to seek legal help? Ideally, before you make an irreversible decision in the inheritance proceedings. If you are unsure what is best for you, consult a lawyer. An experienced lawyer from our Prague-based legal team can help you analyze the state of the estate, explain the implications of each step, and may suggest an optimal solution (e.g., an agreement with creditors, liquidation of the estate by the court, etc.). A consultation is particularly worthwhile in cases where there is significant debt, multiple heirs with differing opinions, or when minor heirs are involved and there is a risk of them taking on debts.

Do not be afraid to ask the notary questions and actively address your concerns during the inheritance proceedings. You have the right to be cautious. An inheritance often carries an emotional burden, but from a legal perspective, it is primarily a responsibility for assets and debts. Approach it with full information.

By doing so, you build trust not only with any co-heirs and creditors but also in yourself that you can handle the situation. And if you are at a loss, professionals are there to help you take the right step. A timely consultation with a lawyer can prevent many unpleasantries and ensure that you do not have to pay financially on top of the painful loss of a loved one.