Transfer of assets during the parents’ lifetime to one child
Parents have the right to transfer their assets during their lifetime to only one child. However, it should be borne in mind that such action may have not only various family consequences, but also legal ones. The most common forms of transferring assets are a gift and drawing up a will; however, a will only becomes legally effective after the testator’s death.
If parents transfer their entire estate to one child, the other entitled persons may have the right to a reserved portion. A reserved portion is a legal institution intended to protect the interests of the testator’s closest family members. It is a form of protection intended to prevent situations in which close family members are completely omitted from an inheritance. The reserved portion amounts to half the value of the inheritance share to which a person would have been entitled under statutory succession, or two-thirds in the case of persons unable to work or minors.
Transferring assets to one child may be considered an unfair distribution of assets by the parents, which may lead to conflict and tension within the family. The other children may feel wronged or unfairly treated. Accusations of favouring one child may arise, potentially leading to long-term disputes and divisions within the family. In such situations, it is important that decisions concerning the distribution of assets are carefully considered and, if possible, discussed with the whole family.
When do you not have to compensate siblings?
If assets are transferred as a gift, the other persons entitled to inherit have the right to demand that the recipient pay them the share of the estate due to them. However, there are situations in which siblings do not have to be compensated.
One way to transfer assets to one child without the need to compensate siblings is to enter into a life-annuity agreement. A life-annuity agreement is a type of civil-law contract constituting a specific form of transferring ownership of real estate. The owner transfers ownership of the property to another person in exchange for lifelong support. Such an agreement is often used to secure an older person’s future, providing care and maintenance for the rest of their life. In this way, accusations of an unfair distribution of assets by the parents can be avoided, since in exchange for transferring the property, they receive care.
The subject of a life-annuity agreement is usually real estate, and concluding such an agreement brings several significant benefits. Above all, a life-annuity agreement is exempt from inheritance and gift tax, which may be financially advantageous.
Moreover, in the case of a life-annuity agreement, siblings have no right to claim a reserved portion, meaning that the recipient does not have to compensate the other family members. A life-annuity agreement can be an effective tool for ensuring a fair distribution of assets and securing older people’s future while avoiding potential family conflicts and the need to make payments to siblings.
When is no reserved portion due after the parents’ death?
There are certain situations in which children are not entitled to a reserved portion after their parents’ death. It is important that each of these situations be carefully analysed in the context of applicable law and the circumstances of the specific case. The most important include situations such as:
- waiver of inheritance – this applies after an agreement to waive inheritance has been concluded in the form of a notarial deed. In that case, the heir loses both the right to inherit and the right to a reserved portion,
- rejection of the inheritance – this is equivalent to losing the right to a reserved portion,
- unworthiness to inherit – an heir may be declared unworthy to inherit if they committed a serious offence against the testator, for example intentionally deprived them of life, attempted to kill them, committed a serious offence against the testator’s health, fraudulently or by threat induced the testator to draw up or revoke a will, or prevented them from carrying out one of these actions,
- disinheritance – the testator has the right to disinherit a person entitled to inherit in a will, thereby depriving them of the right to a reserved portion. However, it should be borne in mind that disinheritance must be carried out in accordance with the law and justified by specific grounds, such as conduct contrary to the principles of social coexistence, persistent failure to fulfil family obligations towards the testator, or causing the testator to draw up or revoke a will under the influence of mistake, threat, fraud or coercion,
- a legacy by vindication – if the testator made a legacy by vindication that exhausts the estate in its entirety, a person entitled to a reserved portion may be deprived of that right, provided that its value is equal to or exceeds the value of the reserved portion,
- insufficient assets in the estate – if the estate is insufficient to satisfy claims for a reserved portion, the entitled person may not receive the reserved portion due in full or may receive nothing,
- gifts included in the inheritance – if the testator transferred significant gifts during their lifetime to a person entitled to a reserved portion, they may be credited towards that reserved portion. In such a case, the value of the gifts may cover or exceed the value of the reserved portion, meaning that no additional reserved portion will be due.
Legal support in cases of an unfair distribution of assets by parents
An unfair distribution of assets by parents often requires legal support, which may involve various actions aimed at protecting the interests of people who feel wronged. In such a situation, the lawyer’s role is to conduct a thorough analysis of the circumstances and documents, such as wills, gift agreements or legacies by vindication. On this basis, the lawyer will advise what steps can be taken to protect the client’s rights.
The lawyer will assess whether a reserved portion is due and determine its value, then assist in drafting and filing a claim for a reserved portion with the court. Another valuable service provided by a lawyer is organising mediation between family members in order to reach an agreement without having to take the case to court and to achieve a fair solution. If mediation does not produce results, the lawyer can help prepare and file a statement of claim with the court, where they will represent the client’s interests throughout the court proceedings.
The lawyer will also check whether the disinheritance or legacy by vindication was carried out in accordance with the law and, if there are grounds to do so, help challenge it. If the gift agreement was concluded under duress, while a party was unable to make a conscious decision, or in a manner violating the heirs’ rights, the lawyer will help have it annulled.
The lawyer will also help calculate the value of gifts that may be credited towards the reserved portion, enabling a fair settlement of gifts in the context of the distribution of assets. Legal support is essential to ensure that all actions comply with the law and that the interests of wronged persons are properly protected. The lawyer will be not only an adviser, but also a representative of the client’s interests, helping them navigate complex legal proceedings and achieve a fair solution.