According to the Bundesgerichtshof’s (Federal Court of Justice) ruling of July 7, 2015, a bequest premised on renouncing an inheritance is not necessarily deemed to be a gift (X ZR 59/13).
GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: The Bundesgerichtshof (BGH) held that whether a bequest granted in connection with renouncing an inheritance is to be classified as a gift depends primarily on the will of the parties. If the testator attaches particular importance to the recipient of the bequest waiving his right to inherit as a quid pro quo, the Court stated that this is not to be considered a gift as the main focus would be the financial equalisation in this case. On the other hand, it also went on to say that if this type of bequest is the central aspect and the renunciation of the inheritance represents merely a special kind of consideration of the right to inherit, this generally gives rise to the presumption that the bequest is gratuitous in nature.
In the instant case before the BGH, a father sued to effect the transfer of several co-ownership shares in a plot of land that he had given to his daughter from his first marriage as a gift. The parties had concluded a notarised agreement to this end in 2008, referred to in German as a “mittelbare Grundbesitzschenkung – Erbvertrag – Erb- und Pflichtteilsverzicht” (indirect gift of property – contract of inheritance – renunciation of inheritance and compulsory portion). Part of the agreement involved the father giving his daughter a sum of money as a gift that she could only use to acquire a particular condominium and shares in two other apartments on the same plot of land. In return, the daughter waived her rights to the inheritance and compulsory portion.
The father subsequently wished to revoke the gift owing to “gross ingratitude”. His legal action was unsuccessful before the lower instance courts because he, in the view of the appellate court, had not relinquished the apartments to his daughter for nothing but in fact in the expectation that she would waive her inheritance.
However, the BGH ruled that the parties’ wishes had not been sufficiently investigated. Indications regarding the parties’ definitive intentions could be derived from the emergence of the agreement and its arrangement. The Court stated that it needed to be borne in mind that the notarised contractual deed made explicit reference to a gift. The BGH referred the case back to the appellate court for reconsideration.
A lawyer who is competent in the field of succession law can advise on issues concerning inheritance and gifts.
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