In its judgment of June 24, 2026 (case no. IV ZR 141/25), the Bundesgerichtshof (BGH, Federal Court of Justice) addressed the question of when the ten-year period under § 2325(3), sentence 2 BGB (German Civil Code) begins in the case of a property transfer in return for payment of a life annuity. The key issue was whether a life annuity claim granted to the decedent, which was additionally secured by a real charge over the transferred property, meant that the decedent continued to enjoy the economic use of the property and that the ten-year period therefore had not yet begun to run.
The BGH held that a life annuity promise does not, as a general rule, constitute continued use of the transferred property by the decedent. This also applies where the life annuity is secured by a real charge over the property. The BGH has thus clarified the conditions governing the commencement of the ten-year period for property transfers made in return for life annuities.
Inheritance Dispute Between Siblings
The judgment arose from an inheritance dispute between two siblings. The claimant asserted claims for a compulsory share supplement against her brother, whom their mother had appointed as sole testamentary heir.
During her lifetime, the mother had already transferred ownership of a total of four properties to her son under a notarised transfer agreement dated November 20, 1995. One of these properties was developed with a rented residential building.
Monthly Life Annuity for the Decedent
In consideration for the transfer of the properties, the son undertook to pay his mother a monthly life annuity of DM 1,500. A real charge was created over the property developed with the residential building to secure this claim. The transfer agreement stated that the basis for the annuity payments was the rental income from the residential building, amounting to approximately DM 1,900 per month. The transfer of title and registration of the real charge in the land register took place on March 7, 1996.
With effect from October 28, 2013, the mother waived any further life annuity payments from her son and consented to the cancellation of the real charge registered in the land register. The mother died on April 17, 2021.
Did the Property Transfer Constitute a Gift?
The daughter took the view that the transfer of the properties to her brother constituted a gift, at least in part. Because the value of the properties exceeded the capitalised value of the agreed life annuity, she argued that the excess amount constituted a mixed gift.
By way of an action by stages, the daughter therefore initially sought a determination of the value of the transferred property and the capital value of the agreed life annuity. The amount of the claim for a compulsory share supplement was then to be determined on this basis.
The Landgericht Weiden (Weiden Regional Court) upheld the action in a partial judgment dated June 21, 2024 (case no. 11 O 108/23). The Oberlandesgericht Nürnberg (Nuremberg Higher Regional Court) also dismissed the son’s appeal in a judgment dated June 27, 2025 (case no. 1 U 1335/24 Erb). The defendant subsequently appealed on points of law to the Bundesgerichtshof.
Judgment of the Bundesgerichtshof
The Bundesgerichtshof allowed the defendant’s appeal on points of law and set aside the judgment of the Oberlandesgericht Nürnberg. It held that, at the time the estate devolved, the transfer of the properties under the transfer agreement of November 20, 1995 was no longer subject to a compulsory share supplement under § 2325(1) BGB. In the BGH’s view, the ten-year period under § 2325(3), sentence 2 BGB had already begun when the transfer of title was registered on March 7, 1996. It had therefore expired on March 7, 2006, more than ten years before the decedent’s death.
Life Annuity Promise Does Not Delay Commencement of the Period
The life annuity promise did not delay the commencement of the period. The additional security for the life annuity in the form of a real charge did not alter this conclusion.
The BGH formulated the following official headnote in this regard (paraphrased translation): A promise of a life annuity made to the decedent in connection with the transfer of a property does not result in the decedent’s continued use of the property in the legally relevant sense—even if it is secured by a real charge over the transferred property—and therefore does not preclude a transfer that triggers the commencement of the period within the meaning of § 2325(3), sentence 2 BGB.
Action for Valuation Dismissed
The action for valuation was therefore dismissed. However, a particular issue arose concerning the mother’s subsequent waiver of the life annuity: in the BGH’s view, this waiver itself constituted a gift, for which the ten-year period did not begin to run until October 28, 2013. Consequently, that period had not yet expired when the estate devolved.
However, because the claimant had not filed a separate application for valuation in respect of this waiver of the annuity, it could not assist her at the first stage of the present proceedings.
Reasons Given by the BGH
The Bundesgerichtshof based its decision primarily on the interpretation of the term “transfer” within the meaning of § 2325(3), sentence 2 BGB and on the purpose of the statutory ten-year period.
Requirements for the Commencement of the Ten-Year Period
Under § 2325(3), sentence 2 BGB, a gift is generally disregarded when calculating the claim for a compulsory share supplement if ten years have elapsed since the gifted asset was transferred.
The BGH first clarified that relinquishing legal ownership alone is not decisive for the commencement of this period. In addition, the decedent must cease to retain substantial use of the gifted asset. Accordingly, a gift is not deemed completed until the decedent relinquishes the actual enjoyment of the gifted asset.
This is consistent with the BGH’s established case law, particularly in cases where the decedent reserved a usufruct or right of residence when transferring a property.
If the decedent reserves such rights, they may continue to exercise material powers of control over the transferred asset. In such cases, the ten-year period generally does not begin until the corresponding rights of use are relinquished.
No Continued Use as a Result of the Life Annuity Promise
The decisive issue in the present case was whether the agreed life annuity could likewise be regarded as constituting continued use of the property. The Oberlandesgericht Nürnberg had answered this question in the affirmative. It argued that the life annuity was linked to the rental income from the transferred property and was additionally secured by a real charge. From an economic perspective, the mother had therefore continued to benefit from the income generated by the property.
The BGH expressly rejected this view. According to the Court, a life annuity promise does not mean that the former owner continues to hold a position of control over the property comparable to that of an owner.
Rather, upon transferring the property, the decedent loses the power to
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use the property personally,
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determine its use by third parties, or
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prevent its onward sale or encumbrance.
The life annuity claim merely establishes a contractual claim to recurring monetary payments. This claim exists independently of the property’s economic circumstances.
In particular, the transferee is not required to fund the life annuity payments from the income generated by the transferred property. The transferee may equally make the payments from other assets. This is not altered by a contractual provision under which the amount of the life annuity is linked to the property’s rental income.
The BGH therefore focused on the decedent’s legal and actual position of control, rather than solely on an economic analysis of the cash flows before and after the property transfer.
Distinction Between a Life Annuity and a Usufruct
Another key aspect of the decision is the distinction between a life annuity claim and a reserved usufruct. The BGH emphasised that the two legal positions must be assessed differently as a matter of law.
In the case of a usufruct, the decedent reserves a proprietary right to use the transferred property. The decedent may continue to derive benefits from the property and, for example, collect rental income directly.
By contrast, in the case of a life annuity, the decedent receives a separate payment claim against the transferee. The annuity payments constitute the agreed consideration for the property transfer and are not to be regarded as continued use of the property.
The BGH therefore distinguishes between the economic use of a property on the basis of a reserved right of use and the receipt of consideration for transferring ownership. The fact that the decedent continues to receive economic benefits from the property transfer by way of the life annuity is insufficient to prevent the period from commencing.
Real Charge Does Not Alter the Assessment
In the BGH’s view, the creation of a real charge did not lead to a different conclusion either. A real charge serves to secure certain recurring payments out of the property. If the obligated party fails to comply with their payment obligations, the beneficiary may enforce against the property and procure its realisation.
However, the real charge does not grant the beneficiary any right to use the encumbered property. In particular, it does not entitle the beneficiary to use the property personally or determine its use by third parties. Because the real charge merely serves to secure the payment claim, it does not establish a continuing relationship of control between the decedent and the property.
Consequently, the combination of the life annuity promise and the real charge could not prevent the ten-year period from commencing.
Purpose of the Ten-Year Period
The BGH also based its decision on the purpose of the statutory provision. § 2325 BGB is intended to prevent the decedent from undermining close relatives’ compulsory share entitlements through lifetime gifts. By contrast, the ten-year period under § 2325(3) BGB serves to protect the donee. In particular, it is intended to provide legal certainty and prevent the donee from being exposed to claims for a compulsory share supplement for an unlimited period.
The legislature intended such gifts to be excluded from the notional estate after ten years as a general rule, provided that the decedent had actually borne the material consequences of the gift. In the BGH’s view, it would be incompatible with this legislative objective to make the commencement of the ten-year period dependent solely on an economic analysis of the monetary amounts flowing before and after the property transfer.
Such an approach would lead to considerable legal uncertainty. In particular, it would be difficult to predict the circumstances in which consideration for a property transfer would still be regarded as continued use of the property.
The decisive factor must therefore be whether the decedent actually relinquished their owner-like position of control over the gifted asset. In the present case, this occurred when the transfer of title was registered in the land register on March 7, 1996.
Separate Gift Arising from the Waiver of the Life Annuity
Finally, the BGH addressed the mother’s subsequent waiver of the outstanding life annuity payments. The Court clarified that this waiver also constituted a separate gift within the meaning of § 2325(1) BGB.
As a result of the waiver of the remaining annuity payments, the son received a financial benefit without having to provide corresponding consideration. In relation to this gift, the ten-year period did not begin until the waiver took effect on October 28, 2013. As the mother had already died on April 17, 2021, ten years had not yet elapsed at that time.
In principle, a claim for a compulsory share supplement could therefore have arisen in respect of the waiver of the life annuity. However, the claimant had sought only a valuation of the original property transfer and of the life annuity claim agreed at that time. A separate valuation of the subsequent waiver of the annuity was not covered by the relief sought in her action.
For this reason, the BGH was able to dismiss the action in its entirety at the first stage.
Summary and Significance of the Decision
In its judgment of June 24, 2026, the BGH provided important clarification for inheritance law practice. The decision makes clear that, when determining the commencement of the ten-year period under § 2325(3), sentence 2 BGB, the assessment must not be based solely on the economic benefits that the decedent continues to receive after transferring a property.
Rather, the decisive factor is whether the decedent has actually relinquished their owner-like position of control over the transferred asset.
A life annuity promise does not generally constitute continued use of the property. This also applies where the amount of the life annuity is linked to the property’s rental income and the claim is secured by a real charge.
The BGH thus clearly distinguishes a life annuity from a reserved usufruct or right of residence. While such rights of use may delay the commencement of the ten-year period, a mere life annuity claim does not generally prevent the period from commencing.
The judgment is therefore highly significant for structuring property transfers as part of anticipated succession. It provides greater legal certainty when agreeing life annuities and facilitates the assessment of when the ten-year period applicable to compulsory share supplement claims begins to run.
At the same time, the decision demonstrates that, when drafting agreements and subsequently asserting claims for a compulsory share supplement, a distinction must be drawn between the original property transfer and a later waiver of agreed consideration. Both transactions may constitute separate gifts and may each trigger their own limitation period.
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