Lifetime gifts can affect the compulsory portion. When gifts are added back and which time limits apply to entitled persons and to third parties.
Mag. Bernhard Brandauer
Attorney · BRANDAUER Rechtsanwälte, Salzburg
Inheritance matters are handled by Mag. Bernhard Brandauer together with a coordinated team. We examine the will, compulsory portion, gifts and deadlines and tell you clearly where you stand.
Anyone who gives away assets during their lifetime often also changes the later distribution of the estate. Austrian inheritance law adds certain gifts back when calculating the compulsory portion, so that persons entitled to a compulsory portion are not left empty handed by early gifts.
This article explains which gifts count in the crediting of gifts, which time limits apply to entitled persons and to third parties and which evidence matters. It does not replace advice in an individual case but provides a basis for a first assessment.
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The answer decides whether and how a gift is taken into account when crediting against the compulsory portion.
Gifts to persons entitled to a compulsory portion are in principle added back without a time limit when crediting of gifts applies. The gifted assets notionally increase the basis of assessment and are credited to the recipient against their compulsory portion.
This prevents lifetime gifts from hollowing out the compulsory portions of other entitled persons.
Gifts to persons not entitled to a compulsory portion are taken into account in crediting of gifts only where they were made within the last two years before death. Older gifts to third parties are left out of account.
What matters is the point in time at which the assets actually left the assets of the deceased.
Customary occasional gifts are not added back in crediting of gifts as long as they are reasonable in occasion and amount. They do not reduce the compulsory portion.
If a gift exceeds the customary scope, it may still be subject to crediting. The distinction is a question of the individual case.
The law of the compulsory portion secures close relatives a minimum share of the estate. If earlier gifts remained out of account, the compulsory portion could easily be reduced by lifetime gifts. For this reason certain gifts are notionally added back to the basis of assessment.
The adding back does not change what is in the estate but the calculation. The compulsory portion is determined from the value increased in this way and the recipient must have the gift credited against their share.
Gifts to persons entitled to a compulsory portion are in principle added back without any time limit. It does not matter how long ago the gift was made. This preserves the balance among the entitled persons.
The position is different for gifts to third parties without a claim to a compulsory portion. They count only where they were made within the last two years before death. What matters is the point in time at which the assets actually left the assets of the deceased.
Customary occasional gifts are left out of account as long as they are reasonable in occasion and amount. A gift for a birthday or wedding within the usual scope does not reduce the compulsory portion. If a gift exceeds this scope, it may still have to be credited.
Crediting works in both directions. Anyone who has received a gift must have it credited against their own compulsory portion. Anyone who is entitled to a compulsory portion can require that gifts to others be taken into account in the calculation. A careful survey of the gifts is therefore important for everyone involved.
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