Gifts and Inheritance
It is often advisable to transfer assets during your lifetime. In the case of an anticipated succession, the transfer of the assets or a substantial part thereof by the future testator therefore takes place. Suitable transfer agreements serve to secure a planned and not abrupt generational change. In the ideal case, the parents reach an overall agreement with the children, which includes equality money and severance payments. If legal heirs are excluded against their will, such a unilateral solution regularly provokes disputes about the compulsory portion and supplementation of the compulsory portion. Gifts can be used to turn over certain assets during one’s lifetime. In doing so, however, one should determine an offset against the compulsory portion and inheritance share or reserve the right to do so.
When waiving the inheritance, it should be borne in mind that the claims to a compulsory portion of other persons entitled to a compulsory portion may then be increased. In any case, the valuation of the assets should always be realistic, since a possible revaluation can lead to compensation claims against the heir.
Which form of handover is required in detail depends on the individual circumstances. The senior can choose between a normal gift without conditions, a conditional gift or a mixed gift. If he still wants to reserve rights of use in the company for himself, a beneficial interest might be useful. It is non-transferable and non-heritable and therefore offers the successor protection against remarriage of the senior.
Waiver of the Compulsory Portion
The testator must pay particular attention to the right to the compulsory portion. Descendants, spouses and parents are entitled to the compulsory portion if they were appointed as heirs, but are excluded from the inheritance by will. Persons entitled to the compulsory portion can therefore be: spouses, their own children and their descendants, parents (but not siblings!), when there are no descendants. Disinheritance, in which the right to the compulsory portion also lapses, is only permissible in very exceptional cases. The compulsory portion is calculated at half of the statutory share of the inheritance. The beneficiary of the compulsory portion can immediately demand his claim in money from the heir. This claim cannot be reduced at will by the testator reducing his assets already during his lifetime by means of benefits. In this case, the beneficiary of the compulsory portion is entitled to a supplement to the compulsory portion. If the testator already endows an heir with a livelihood (e.g. with shares in the company), the amount may have to be balanced against the beneficiary of the compulsory portion. Gifts made by the testator during his lifetime in a period of ten years before the succession also entitle the beneficiant to a supplement to the compulsory portion.
Since 1 January 2010, there has been a legal change with regard to the right to a supplement to the compulsory portion. The so-called ” melt-away model ” applies: the longer the lifetime gift has been in the past, the less it will gradually be taken into account for the calculation of the supplemental right to the compulsory portion (melt-away of 10% per year over a period of 10 years). While until 2010, 100% of the value of the assets donated was included in the calculation in the period mentioned. The change gives the heir and the donee greater planning certainty. If an heir entitled to a compulsory portion receives an inheritance share that is worth less than the compulsory portion, he is entitled to financial compensation. If the estate is divided in such a way that a beneficiary of the compulsory portion receives no or less assets than correspond to the compulsory portion, he could claim the difference from the (other) heirs. In order to avoid this, the testator needs a waiver of the compulsory portion or an agreement. Often, other forms of compensation are provided for. A waiver of inheritance is also conceivable; however, this arrangement is usually unfavourable because it increases the claims to the compulsory portion of other persons entitled to the compulsory portion. Waiver of the compulsory portion and waiver of inheritance require notarisation. A corresponding contract of inheritance can then no longer be unilaterally amended, unless the contract of inheritance expressly grants a corresponding authorisation.
In order to avoid immediately due compensation claims, it may therefore make sense to appoint an heir who is entitled to a compulsory portion with a division order for values in the amount of the compulsory portion as the heir. If, in the event of a subsequent sale, a higher value of an estate object than the estimated value already exists in the event of inheritance, the estate may be re-valued.
We rightly talk about these topics in our Round Table meetings. The Round Table is an action of Herfurth & Partner and serves to clarify and secure wishes and decisions in the family in connection with assets, provision and succession.
The next dates can be found in the Round Table section (welcome homepage).
Further information on many topics can be found in the Publications section (welcome homepage).
Angelika Herfurth
Attorney at law and specialist lawyer for family law