Article 1163
Where there is both statutory inheritance and testamentary succession or bequest, the legal heirs shall pay off the taxes and debts that the decedent shall pay in accordance with the law;
1. The main purpose of this article
This article is about the settlement of debts in the event of both statutory succession and testamentary succession and bequest.
II. Evolution of the Provisions
Article 62 of the original Opinions on the Inheritance Law stipulates that: "When the estate has been divided and the debts have not been discharged, if there is a statutory succession and testamentary succession and bequest, the legal heirs shall first use the inheritance to pay off the debts; This provision is amended from the provisions of Article 62 of the original Opinions on the Inheritance Law.
3. Interpretation of Provisions
This article is about the order of repayment of estate debts when statutory succession, testamentary succession and bequest exist at the same time.
In the case of both statutory succession and testamentary succession and bequest of an inherited person, which part of the estate should bear the inheritance debts first involves not only the understanding of the effectiveness of different inheritances and bequests, but also the protection of the creditor's rights of the decedent's creditors. This is not provided for in the Inheritance Act, and the rules set out in this article are:
(1) First of all, the legal heir shall pay off the taxes and debts that the decedent shall pay according to law. This is because the effect of testamentary succession and bequest takes precedence over statutory inheritance, and when paying off inheritance debts, of course, the part of the estate inherited by the legal heirs should be used first to pay off the taxes and debts that the decedent should pay according to law.
(2) If the amount of taxes and debts payable by the decedent exceeds the actual value of the statutory inheritance, that is, the part of the estate inherited by the legal heirs is still insufficient to pay off the taxes and debts, the testamentary heirs and the legatee shall pay off the inheritance in proportion to the inheritance. The so-called proportionality means that the testamentary heir and the legatee have the same effect of receiving the inheritance, and there is no question of priority, so the taxes and debts should be paid off with the income in proportion. This ratio is the proportion of the estate received by the testamentary heirs and legatees.
Regardless of whether it is a legal heir, a testamentary heir, or a legatee, he or she shall not be liable for the repayment of debts in excess of the part of the estate he or she has received.
4. Cases
Li Jia v. Liu Moumou, a debt dispute case
Facts: Li Jia's mother, Xu, ran a restaurant before her death and raised four sons and four daughters, all of whom have separated from each other. On November 28, 2013, Xu made a will to leave the property and debts of the restaurant to Li Jia. Xu died on November 11, 2014. The children sued the court over an inheritance dispute. The court found that the will was valid, so it ruled that Li Jia inherited the estate according to the will, and the estate not involved in Xu's will, that is, the building, was inherited by Xu's daughter Li Yi as the legal heir after consultation among the children, and the other children voluntarily renounced the right of inheritance. On April 20, 2017, Liu Moumou filed a lawsuit with the court on the grounds that he requested Li Jia to repay the arrears of seafood purchased on credit from Xu during the operation of the restaurant, requesting Li Jia to repay the arrears. The court of first instance resumed the trial after the conclusion of the inheritance case and ordered that the arrears should be repaid by Li Jia. Li Jia was not satisfied and appealed. The court of second instance held that Liu's claim did not exceed the statute of limitations, and that the restaurant's house, management rights, and creditor's rights were all inherited by Li Jia, and that Li Jia should be responsible for paying off the debts. The court dismissed the appeal and upheld the original judgment. Li Jia was dissatisfied with the second-instance judgment and filed a complaint with the procuratorate. The procuratorate protested that Xu's independent restaurant was an individual industrial and commercial household, and his debts should be borne by personal property. After his death, the heirs shall pay off the debts of the deceased within the actual value of the inherited estate. The retrial court held that, based on the fact that the estate in this case had been divided, according to the regulations, the debt should be repaid by the legal heir Li Yi first, and the insufficient part should be repaid by the testamentary heir Li Jia, and the judgment that Li Jia should repay the debt was improperly applied. The procuratorate's grounds for protest were established and should be upheld, so the judgment was reversed.
5. Analysis
In this case, the will made by Li Jia's mother Xu was valid, so the relevant estate involved in the will should be distributed according to the will, and the estate not involved in the will should be distributed according to the statutory inheritance. Since the other children of the decedent Xu voluntarily gave up their inheritance rights, the estates not involved in the will were inherited by Xu's eldest daughter Li Yi as the legal heir. The debts incurred by Xu as an individual owner during his lifetime were personal debts, and Xu's estate was able to pay off his personal debts after his death. According to the principle of limited inheritance, the inheritance shall be limited to the actual value of the estate to pay off the taxes and debts that the decedent shall pay in accordance with the law. If the heir renounces the inheritance, he may not be liable for repaying the taxes and debts that the decedent shall pay in accordance with the law. Therefore, the children who gave up their inheritance rights in this case are not liable to repay Xu's personal debts. According to the provisions of the Inheritance Law in force at the time of the case on the order of repayment of estate debts when statutory inheritance and testamentary succession exist at the same time, the legal heir Li Yi shall be responsible for paying off this debt first, and if the estate obtained by Li Yi by legal inheritance is insufficient to pay off the personal debts of the decedent, the part exceeding the actual value of the statutory inheritance will be paid off by the testamentary heir, that is, Li Jia, with the inheritance. Before the creditor requests Li B to repay the debts in accordance with the law, Li Jia has the right to refuse his request to repay the debts.