Administration of an Estate and Executor of a Will in Czech Republic
The administration of an estate is an important but often neglected area of private law, which becomes particularly important when it is necessary to ensure the preservation and settlement of an estate of a deceased person. This article focuses not only on the two key roles in succession proceedings - the executor of a will and the administrator of an estate - but also on the general regulation of the administration of an estate as a legal institution. Each of these roles has its own specific status, legal basis and practical application. The aim of the article is to provide a clear overview of the legal regulation, to define the powers and responsibilities of each actor and to highlight their importance during and after the succession proceedings.
Executor of a Will and Administrator of an Estate
The first position recognized under Czech law is the executor of a will, governed by Sections 1553 – 1555 of Act No. 89/2012 Coll., the Czech Civil Code (the “CCC”). The primary aim of the executor of a will is to oversee the proper fulfilment of the testator’s last will, and is typically a person the testator trusts. An executor of a will may be a relative (spouse, sibling, descendant, etc.) or a professional (lawyer or notary), and it is also permissible for a legal entity to serve as executor of a will.
The second position in inherited assets proceedings recognized under Czech law is the administrator of an estate, regulated in Sections 1556 – 1559 CCC. This is a relatively recent legal institution in Czech law. Its main purpose is to manage the estate during succession proceedings and preserve its value and substance. Like the executor of a will, the administrator of an estate may be both a natural or legal person, and if the estate is expected to pass to the state, even the state itself may be appointed as administrator.
Appointment, Resignation and Removal from Office
Appointment of executor of a will and administrator of an estate is governed by Sections 1553 and 1556 CCC, respectively.
Executor of a will may be appointed by a will. While the literal wording of the CCC implies this is the only method, legal scholars differ in opinion, and some argue that appointment with other forms of dispositions of property upon death may also be valid.
Administrator of an estate must be appointed by a public deed, making his appointment also limited. Court may appoint an administrator under Section 157 of Act No. 292/2013 Coll., the Act on Special Court Proceedings (the “ZŘS”) if an executor of a will has not been appointed, refuses the role, is obviously unfit to administer the estate, or if the heirs cannot manage the estate themselves. The court may also appoint an administrator to prepare an inventory of estate assets or for another serious reason, e.g. filing claims in insolvency proceedings.
In both roles, consent of the appointed person is required. The person in either of the roles also has the option to resign at any time with resignation becoming effective upon delivery to the court. The court may also remove the executor of a will or administrator of an estate ex officio if they seriously breach their duties, are incapable of fulfilling them properly, or for another serious reason.
Duration of Office
The executor of a will’s term is not limited to the duration of the succession proceedings and generally lasts until all bequests are settled and all tasks assigned by the testator are completed.
In contrast, the administrator of an estate’s term is specifically limited to the duration of the proceedings, ending when the court confirms the inheritance (Section 1677(1) CCC).
Rights, Duties and Tasks
According to Section 1554(1) CCC, the executor of a will must ensure that the testator's will receives proper execution with due care. This duty requires the executor to act diligently, professionally and loyally towards the testator. The law assumes that the executor knows the testator's intentions best and can therefore supervise proper will execution.
The executor can enforce court proceedings to fulfill orders imposed by the will. The law grants wide powers to the executor when the testator establishes a foundation through property disposition upon death. In such cases, the executor may decide foundation details not included in the disposition. The executor can appoint members of the administrative or supervisory board or appoint a new administrator of the foundation's deposits. The executor also bears responsibility for settling legacies.
The executor of a will plays an important role in succession proceedings. According to Section 114 ZŘS, the executor becomes a party to the succession proceedings, with few exceptions. Courts must summon the executor to hearings. The executor may lodge appeals and intervene as a party in the succession proceedings.
Furthermore, the executor has the right to attend estate inventory proceedings. The executor can raise questions and make comments during these proceedings. The executor also participates as a party in supplementary succession proceedings.
The law grants few other powers to the executor of a will beyond those mentioned above. The CCC explanatory memorandum states that the executor's task involves mainly mediation powers. The executor's involvement in succession proceedings proves crucial.
The testator may assign additional rights and obligations to the executor in the property disposition upon death. For example, the testator can entrust the executor with distributing the estate among heirs.
Once the succession proceedings have been concluded, it is the executor of a will's task to ensure that all the testator's orders are complied with, in particular the conditions, determination of time and orders. In order to carry out this task, the executor may then, where appropriate, bring actions against the heirs (e.g. actions for fulfilment or petitions for the commencement of supplementary succession proceedings). Beyond this, however, the law does not grant him any other procedural remedies. As regards the penalties imposed on the heirs in the event of non-compliance with the order, these arise from the type of order; in the event of a suspensive condition, the heir does not acquire the inherited assets, whereas in the event of non-compliance with the order, he loses it.
If the testator has not appointed an administrator of an estate, the administration of an estate also falls to the executor of a will, but it is important to note that he does not have to accept this obligation. The executor then administers the estate, like the administrator, in accordance with Article 1677(1) CCC only until the confirmation of the succession, after which the task of administering the estate ceases. Where the executor also administers the estate, the law distinguishes between an executor of a will called by private deed and an executor of a will called by public deed. An executor called by public deed is subject to higher standards and is generally viewed more strictly by the law.
The primary task of the administrator of an estate is, as the name implies, the administration of the estate. As a general rule, the administrator carries out the simple administration of the estate in accordance with Article 1678(1) CCC (on the administration of the estate in general and the principles of administration of the estate below). Case-law also establishes the possibility for the administrator to recover the claims relating to the administered property by procedural means, including by filing an action (NS ČR 21 Cdo 382/2020).
In case of both offices, the testator may also specify the rights and duties of the executor of a will or administrator of an estate at the time of the appointment, thus specifying their rights and duties under the law or adding additional ones.
Remuneration
The executor of a will’s function is generally unpaid, although the testator may grant a fee under Section 1553(1) CCC. The executor may also agree on a fee with parties who benefit from their service. The question of reimbursement of expenses incurred by the executor in connection with the performance of his duties remains unclear and unfortunately, even experts do not agree on a clear solution here.
Conversely, the administrator of an estates’s role is typically compensated. The testator may specify the fee, otherwise the administrator is entitled to the usual remuneration under Section 1402(1) CCC. The fee can be fixed or calculated via a set formula. Administrators also receive reimbursement of expenses. The administrator is entitled to remuneration even if he is appointed by the court.
Mutual Relationship between the Executor of a Will and the Administrator of an Estate
If both an executor and administrator are appointed, Section 1558 CCC establishes their hierarchy: the administrator must follow the executor’s instructions, and their mutual relationship is governed by provisions on mandate. The administrator is therefore subordinate to the executor.
Section 1677(1) CCC also governs this relationship, stating: “If the testator has appointed an administrator of an estate or an executor of a will, the estate shall be administered by the administrator of an estate until the confirmation of inherited assets; otherwise, the executor shall administer it.” The administration of the estate is therefore primarily carried out by the administrator.
Administration of Estate in General
General estate administration is governed by Sections 1677 et seq. CCC. By default, the estate is managed by the administrator of an estate, then by the executor of a will, and if neither, by the heirs jointly. Whoever manages the estate exercises simple administration. The person administrating the estate must disburse entitlements, notify legatees of their legacies, and with court approval settle due legacies (Section 1678(2) CCC).
Section 1405 et seq. CCC contains general regulation of simple administration by the person administering the estate. The person who exercises simple administration must do everything necessary to preserve the property. The administrator does not need to actively reproduce the property. However, the administrator must not remain passive and must take active steps to preserve the property.
The law provides no specific, complete definition of "preservation of property." Courts always assess conduct in relation to the particular case and circumstances.
Duties of Property Administrators
The law then generally imposes a duty on the administrator of someone else’s property to exercise all rights relating to the administrated property and to manage it properly. In general, the administrator should continue to deal with the property as the testator himself dealt with it and take only actions aimed at preserving the property and preventing its deterioration. Typically, this will include, for example, paying or collecting rent, arranging and paying for repairs, making payments to keep the business running (VSPHA 6 Cmo 185/2023). In relation to shares in corporations, in accordance with Section 42(2) of Act No. 90/2012 Coll., Business Corporations Act (“ZOK”), this will involve the exercise of all rights associated with the share, including participation in the general meeting and voting, challenging the resolution of the general meeting by a motion to declare it invalid or taking a dividend.
Section 1679(1) CCC sets out when the administrator may alienate or alter the use of estate: “If required by the interest in preserving the value or essence of the property under administration, things from the decedent’s estate may be alienated or used as security during the administration, otherwise only if it is for consideration. This also applies where the purpose of the property under administration is to be changed.”. It is clear from this provision that the administrator may alienate something from the administered property only if it is in the interest of preserving the value or substance of the administered property or if the estate receives adequate consideration for it (NS ČR 24 Cdo 3642/2021). Section 1679(2) CCC also gives the administrator the right to take action beyond simple administration (i.e. beyond what is necessary to preserve the property). The administrator then needs the consent of all the heirs for such an act and if the heirs do not agree or if the heir is a person under special protection (e.g. a minor), the consent of the court is required.
Special Cases: Suspensive Conditions and Time Determinations
Estate administration does not cover cases where the will imposes a suspensive condition or time determination. In such cases, succession passes first to the preceding heir. This heir holds the inherited assets before the condition gets fulfilled. Only when the condition becomes fulfilled does succession pass to the next heir.
The next heir is the person designated in the property disposition upon death with the suspensive condition or time determination. Section 1567(1) CCC restricts the preceding heir as a beneficiary. The provisions of fideicommissum succession (Sections 1520 - 1524) apply simultaneously.
If the preceding heir wishes to alienate or encumber the property, section 1522(1) CCC requires the next heir's consent. This consent must take the form of a public deed. If the testator does not designate a preceding heir in the property disposition upon death, the statutory heir becomes the preceding heir. Although the CCC does not directly provide for this rule, it appears in the explanatory memorandum to the Czech Civil Code and bases itself on the General Civil Code of 1811.
International Element in Succession Proceedings
It is also common that there is an international element to be resolved in succession proceedings. In the event that the succession proceedings are conducted by the Czech courts, the court will apply Regulation No 650/2012 of the European Parliament and of the Council (“Succession Regulation”) as the conflict of law rule. The Succession Regulation will also apply in the case of succession proceedings involving nationals of non-EU states, as the Czech Private International Law Act, which would otherwise apply, states in § 73a that “The provisions of this Section shall not apply to matters falling within the scope of a directly applicable European Union regulation.”, i.e. the Succession Regulation. The applicable law governing the succession as a whole, according to Article 21 of the Succession Regulation, will then be the law of the country where the testator had his habitual residence at the time of death, but if it is clear that the testator had a closer connection with another state, the law of that state will apply (e.g. the testator moves to the Austrian Alps for the last few years of his life, but has all his property, family etc. in the Czech Republic). Notwithstanding Article 21, Article 22 gives the testator the right to choose the law of the state of his nationality as the law governing the succession as a whole.
The law governing the admissibility and substantive validity of the disposition of property upon death (with the exception of an agreement as to succession) is then considered separately. It is generally governed by the law that would have applied to the succession of the deceased if he had died on the day on which the disposition was made. Again, however, the testator is free to choose the law of the state of his nationality.
The law governing the succession as a whole is important for assessing the powers of the executor of a will and the administrator of an estate. Thus, where the admissibility and substantive validity of the disposition will be governed by a different law from that of the estate as a whole, it will not matter for the executor and administrator.
The Succession Regulation also addresses the issue of jurisdiction. In general, the courts of the member state in whose territory the deceased had his habitual residence at the time of death have jurisdiction to rule on the succession as a whole. If the testator has chosen the law applicable to the succession as a whole under Article 22 of the Succession Regulation and it is the law of a member state, the parties may agree that the courts of that state have exclusive jurisdiction to rule on any question relating to the succession.
As a general rule, in the absence of a choice, the law of the state in which the deceased was habitually resident at the time of death will be the applicable law and the courts of that state (if it is an EU Member State, excluding Denmark and Ireland) will rule.
Conclusion
In conclusion, the administration of the estate, including the activities of the executor of a will and the administrator of an estate, forms a complex system ensuring a dignified and legally correct settlement of the estate of the deceased. Each of these positions has a specific role to play in the succession proceedings - the executor of a will oversees the implementation of the testator's will, while the administrator of an estate takes care of the preservation and proper administration of the estate until its distribution. A good understanding of these institutes is therefore essential not only for legal professionals, but also for anyone who encounters succession issues on a personal level.
For more information, please do not hesitate to contact us at:
JUDr. Mojmír Ježek, Ph.D.
ECOVIS ježek, advokátní kancelář s.r.o.
Betlémské nám. 6
110 00 Praha 1
e-mail: mojmir.jezek@ecovislegal.cz
www.ecovislegal.cz
O ECOVIS ježek, advokátní kancelář s.r.o.
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