The reservation of the right of residence can still impact the compulsory portion supplement claim even after more than ten years in the case of a gift of real estate. This is evidenced by a judgment of the Higher Regional Court of Munich.
Gifts are a suitable means to avoid inheritance tax or reduce compulsory portion claims. However, it must be considered that the compulsory portion claim, e.g., from the decedent’s children, also applies to items that the decedent gave away in the last ten years before their death, explains the commercial law firm MTR Rechtsanwälte. This so-called compulsory portion supplement claim can even exist if the gift was made more than ten years ago, as shown by a judgment of the Higher Regional Court of Munich on July 8, 2022 (Case No. 33 U 5525/21).
In this case, the decedent had given a residential house to one of his children, reserving for himself the exclusive right of residence in all rooms of the house. The gift took place more than ten years before the father’s death. Nevertheless, one son argued that the property should be considered in his compulsory portion supplement claim. He argued that since the father had reserved the exclusive right of residence, the ten-year period did not apply here.
He was successful with his lawsuit at the Higher Regional Court of Munich. A person entitled to a compulsory portion is also entitled to their share of gifts made by the decedent in the last ten years before their death. According to the so-called melting away process, this value decreases by ten percent each year and is eventually completely excluded from the compulsory portion supplement after ten years, according to the Higher Regional Court. However, according to the case law of the Federal Court of Justice, this does not apply if the decedent has reserved the complete usufruct of the property.
An allocated right of residence is not necessarily equivalent to a usufruct reservation. However, in this case, the father had reserved the sole use of the entire living area, so the difference was so minor that the right of residence reservation was equivalent to the reserved usufruct, the Higher Regional Court explained. Therefore, the claimant is entitled to a compulsory portion supplement claim.
Experienced probate lawyers advise.
