1. What is limited inheritance (inheritance with limited liability)?

• Limited inheritance means that the heir succeeds to all rights and obligations of the decedent, but when repaying debts, liability is limited to the estate and does not extend to the heir’s personal assets.
• This system provides protection for heirs while also safeguarding the rights of creditors.

2. Is it necessary to apply for limited inheritance? Why is it important to submit an estate inventory?

• In principle, as long as inheritance is not waived, limited inheritance applies by law, and no additional application is required.
• However, the family must submit an estate inventory to the court within the prescribed time limit so that heirs can clearly understand whether the decedent had debts and the extent of those debts, facilitating proper repayment.
• At the same time, the court will notify creditors and beneficiaries, allowing them to declare the decedent’s debts or bequests within a specified period and claim payment from the heirs.

3. If limited inheritance already applies by law, why is it still necessary to submit an estate inventory to the court?

• Advantages of submitting an estate inventory:

1. Heirs under limited inheritance only need to repay debts to known and declared creditors. When debts exceed the estate, repayment is made proportionally based on the amount of each claim.
2. If any creditor fails to declare their claim within the prescribed period, they may only assert their rights against any remaining estate, and the heir is not required to use personal assets for repayment.
3. For example, if a father leaves NT$1 million in assets and the heir submits an estate inventory, during the announcement period creditor A declares NT$400,000, creditor B NT$300,000, and creditor C NT$200,000. The heir then fully repays these creditors from the estate. If creditor D fails to declare a NT$600,000 claim within the specified period, they may only claim the remaining NT$100,000 of the estate and cannot demand the unpaid NT$500,000 from the heir.
    

• Risks of not submitting an estate inventory:

1. If heirs do not submit an estate inventory, even though limited inheritance applies by law, they may still face the risk of having to repay debts with their own personal assets.
2. In situations where debts exceed the estate, heirs may be unable to assert that their liability is limited solely to the inherited assets.
3. For example, if father A leaves NT$3 million in assets and the heir does not submit an estate inventory, and A owed NT$1 million each to creditors A, B, and C (totaling NT$3 million). After A’s death, creditors A, B, and C demand repayment, and the heir uses the entire estate to repay them. Later, creditor D claims an additional NT$1 million debt. At this point, no estate remains, and the original creditors are not required to return any funds. The heir must repay creditor D using personal assets. It should be noted that the repayment amount is NT$750,000, not NT$1 million, as it must be calculated proportionally based on the total claims (NT$3 million divided among four creditors).

4. What is the procedure for limited inheritance?

• The heir must prepare and submit the estate inventory to the court within three months from the time they become aware of their inheritance rights.
• Creditors may also apply to the court to order the heir to submit the estate inventory within three months.
• When the court becomes aware that a creditor is seeking repayment of inheritance debts through litigation or non-litigation procedures, it may, on its own authority, order the heir to submit the estate inventory within three months.

• When the heir submits the estate inventory to the court, the court shall issue a public notice ordering the decedent’s creditors to declare their claims within a specified period, which shall not be less than three months. (Civil Code Article 1157)
• Settle debts to creditors and distribute bequests within the scope of the inherited estate in accordance with the law.
• After the period specified in Article 1157 has expired (not less than three months), the heir shall repay declared and known debts proportionally according to their amounts using the estate. However, this must not prejudice the rights of preferential creditors, such as mortgage holders. (Civil Code Article 1159, Paragraph 1)
• The heir may not deliver any bequest to beneficiaries until debts have been settled in accordance with the preceding provisions. (Civil Code Article 1160)
  
  

5. What happens if a creditor fails to declare their claim within the specified period but later seeks repayment?

• If the heir has properly submitted the estate inventory, applied for public notice to notify creditors and beneficiaries, and settled debts in accordance with the law, any creditor who failed to declare their claim within the specified period—and whose claim was unknown to the heir—may only exercise their rights against any remaining estate.
• For example, if the decedent owed NT$200,000 to creditor Y, but Y failed to declare the claim in time, and only NT$1,000 remains after other debts are repaid, creditor Y may only claim that NT$1,000 and cannot demand the remaining NT$199,000 from the heir.

6. Order of Debt Repayment under Limited Inheritance

1. Priority claims: such as general mortgages and maximum amount mortgages (home loans). Even if these priority creditors fail to declare their claims within the specified period, their priority right to repayment remains unaffected. However, any unpaid portion will be treated as a general claim.
2. General claims declared within the specified period: if debts exceed the estate, repayment is made proportionally based on the amount of each claim.
3. General claims not declared within the specified period: may only be satisfied from any remaining estate after the above repayments.

7. If an heir mistakenly uses personal assets to repay the decedent’s debts, can they request reimbursement?

• Under the current Civil Code, which adopts the principle of “comprehensive inheritance with limited liability,” heirs automatically succeed to all rights and obligations of the decedent.
• Therefore, if an heir uses personal assets to repay the decedent’s creditors, such payment is not considered without legal cause, and reimbursement generally cannot be claimed.
• Accordingly, heirs should exercise caution when repaying debts.
   

8. Is it possible not to submit an estate inventory to the court? If not submitted, how should debts be repaid to creditors?

• Under the current Civil Code, even if an estate inventory is not submitted to the court, all creditor claims must still be repaid proportionally according to their amounts using the estate, without prejudicing the rights of preferential creditors.
• The key point is that all debts must be repaid proportionally in accordance with the law. Unless requested by creditors or ordered by the court, heirs are not strictly required to submit an estate inventory.
• However, repayment must still follow the proportional distribution among creditors, and any secured or preferential claims, such as mortgages, must be satisfied first. 
• In such cases, heirs must settle all debts before delivering any bequests to beneficiaries.

9. What should be done if there is unfairness in debt repayment by heirs?

• If an estate inventory has been submitted to the court (Articles 1158 and 1161 of the Civil Code)：
  • During the court’s public notice period, heirs must not repay any creditor; otherwise, they will be liable for damages to other creditors.
  • Creditors who suffer losses may directly claim restitution from other creditors who improperly received repayment.

• If no estate inventory has been submitted to the court (Article 1162-2 of the Civil Code)
  • Creditors may claim any unpaid portion directly from the heir, without limitation to the estate (meaning the heir’s personal assets may be at risk).
  • If the heir is legally incapacitated or has limited capacity, the law provides special protection, allowing them to retain the benefit of limited liability.
  • If improper repayment causes damage to creditors, the heir is liable for compensation, and affected creditors may also seek restitution from improperly paid creditors or beneficiaries.