As anyone who watches the news knows, there is a debt crisis taking place in Greece. Greek households are increasingly burdened by debt and, by extension, so are Greek estates. As an heir to a Greek estate, you would be well-advised to forget the old admonition and instead “look that gift horse in the mouth” to avoid being saddled with unexpected debts and liabilities.
Few people realize that heirs to Greek estates inherit the debts of the estate as well as the assets. In fact, the heirs may become personally liable for that debt.
Similarly, few people are aware of the fact that certain next of kin “automatically” inherit when their relative dies without a valid will (for example: spouses, siblings, nieces, nephews, parents may inherit).
If you suspect that you may be an heir to a debt-burdened estate, you would be well-advised to take the following immediate steps to determine the amount of debt entailed:
1. You should ensure that you receive and review the deceased’s correspondence and e-mails, if applicable. It is also advisable to monitor the deceased’s in-coming calls, since many creditors contact debtors by phone in Greece.
2. You should also contact any banks with which the deceased transacted in order to determine the amount of outstanding loans, credit card debt and/or regular payments to other creditors which were made by the decedent through his/her account.
3. Since many debts to the public sector are filed with the Tax Authorities («Εφορία»), it is imperative to search the Tax Office records in order to locate debts owed not only to the Tax Authorities but also to other public sector offices, since many of these debts are registered with the Tax Authorities.
4. If the deceased owned real property in Greece, you should hire a lawyer to conduct title searches at the Mortgage Registries («Υποθηκοφυλακεία») closest to the location of that property since adjudicated creditor actions and other burdens are often on file with the Mortgage Registries in Greece.
When you stand to inherit a debt-laden Greek estate, you have the following three options, depending upon your circumstances.
1. Formally Accept the Inheritance and Assume Liability for the Debt
If you are certain that you can cover the debt and that the estate is worth more than the debt, you can formally accept the estate.
2. Formally Renounce the Debt
If you know for a fact that the debt owed by the deceased is greater than the value of the estate, you would be well advised to formally renounce the right to inheritance (known in Greek as «Αποποίηση Κληρονομίας»). In the case of renunciation, deadlines are critical so please note the following: Residents of Greece must renounce within 4 months. You must formally
renounce the inheritance within 4 months of the date upon which you learned that you are an heir, if you are, and the deceased was, a resident of Greece. To be on the safe side, this should be no later than 4 months from the date of death or the publication of the deceased’s last will and testament; non-residents of Greece must renounce within 1 year. If the deceased lived outside of Greece OR you lived outside of Greece when you learned that you are an heir, you have 1 year from the date upon which you learned of your right to inherit in which to formally renounce your inheritance.
Formal renunciation entails personally submitting a declaration before the clerk of the court located in the area where the deceased was a resident. If the deceased was a resident abroad, this is the court of Athens. In order for someone else to make this declaration on your behalf, a specific Power of Attorney from either a Greek Consulate abroad or a Greek Notary Public is required.
Once you renounce the inheritance, the law considers you to never have been an heir. The estate therefore passes to the person who would have inherited if you had not been alive at the time of the testator’s death. For those of us who are parents, this may mean that our children are next in line to inherit. In order to validly renounce an inheritance on behalf of a minor, both parents must submit declarations of renunciation on behalf of the minor.
I cannot stress enough the prudence of timely renunciations. I have seen a number of heirs lose valuable personal property to the creditors of an inherited estate.
Most recently, I have been contacted by people of Greek descent who live abroad and have no contact with Greece and yet received summons from major Greek banks advising them that legal action had been taken against them personally in Greece for the payment of debts of which they were entirely unaware. In one case, the person was not aware that she was considered an “heir” under Greek law.
3. Formally Accept the Inheritance under the Benefit of Inventory
What do you do if you have no idea whether the deceased had any debts or if you know he/she had debts but cannot determine the amount of those debts or the value of the estate?
Fortunately, there is a third option. You may choose to accept the inheritance under the Benefit of Inventory (known in Greece as «Ευεργέτημα της Απογραφής»).
This form of “acceptance of inheritance” limits your personal liability to the value of the estate; however, it requires you to relinquish the estate to the deceased’s creditors. If there are any assets available, after the creditors of the estate are satisfied, these assets will pass to you as the heir.
As with renunciation, acceptance under the Benefit of Inventory entails strict deadlines which must be adhered to in order for the heir to benefit. Once again, the heir has from 4 months to 1 year, depending upon the circumstances, within which to submit a declaration to the court located nearest to the residence of the deceased.
In order to be protected from personal liability, the heir is required to submit an inventory of the assets of the estate to the same court within 4 months of the date upon which the Declaration of Inheritance under the Benefit of Inventory was filed.
It is advisable and standard practice to hire an attorney to handle the inventory, since this entails significant investigation and documentation and the timeline is particularly restrictive. The heir may also be required to respond to creditor’s court actions in order to settle the estate.
You can prevent the Greek Debt Crisis from reaching your doorstep, if you remain vigilant and take prompt and timely action! Assessing the value and liabilities of your inheritance carefully, or “looking that gift horse in the mouth”, will allow you to determine if the inheritance is a race horse, a plough horse or the back end of a horse.
The law office of Arsinoi D. Lainioti has assisted many heirs to protect themselves and their families from inherited debt. They routinely assist clients with Greek inheritance and estate planning matters. To contact the law office of Arsinoi D. Lainioti visit www.lainioti-lawoffices.com.