Does the Mandatory Share Include Assets Given as Gifts Before Death?

Yes, under German inheritance law, assets given as gifts before death can be included in the calculation of the mandatory share (Pflichtteil). This is addressed through a legal concept known as the Pflichtteilsergänzungsanspruch (mandatory share supplement claim). Here’s how it works:

 
1. Gifts and Their Impact on the Estate
1.1 Why Gifts Are Considered
Gifts given by the deceased during their lifetime are included in the mandatory share calculation to prevent unfair reductions in the estate. Without this rule, individuals could strategically reduce the estate's value to limit the inheritance of mandatory share claimants.

1.2 Gifts as Part of the Estate
These gifts are added back to the estate's value when calculating the mandatory share, even if the gifted assets are no longer part of the estate at the time of death.

 
2. The 10-Year Rule for Gifts
2.1 What Is the 10-Year Rule?
Gifts given within the 10 years preceding the death of the deceased are considered in the mandatory share calculation. Gifts older than 10 years are generally excluded.

2.2 Annual Reduction of Gift Value
The value of a gift is gradually reduced over the 10-year period:

In the first year after the gift is given, its full value is considered.
From the second year onward, the value is reduced by 10% per year.
By the 10th year, the gift is no longer counted.
2.3 Exception for Spouses
Gifts between spouses are always considered, regardless of when they were given. The 10-year rule does not apply in this case.

 
3. Calculating the Pflichtteilsergänzungsanspruch
3.1 Adding Gifts to the Estate
To calculate the mandatory share, the value of eligible gifts is added to the total value of the estate at the time of death.

3.2 Example Calculation

Estate Value: €200,000
Gift Given 3 Years Before Death: €50,000
Adjusted Gift Value: 70% of €50,000 = €35,000
Total Estate Value for Mandatory Share: €235,000
The mandatory share is then calculated based on this adjusted estate value.

 
4. Claiming Against Gift Recipients
4.1 Recipient Liability
If the estate does not have sufficient assets to fulfill the mandatory share, claimants can seek payment from the recipients of lifetime gifts.

4.2 Proportional Claims
Gift recipients are typically liable to return or pay the value of the gift, but only up to the amount necessary to satisfy the mandatory share.

4.3 Priority of Claims
Claimants must first seek their share from the estate itself before pursuing gift recipients.

 
5. Exclusions and Exceptions
5.1 Small Gifts
Ordinary gifts, such as birthday or holiday presents, are not included in the mandatory share calculation.

5.2 Jointly Owned Property
If the deceased and the claimant jointly owned property, the portion gifted to another party may be excluded from the mandatory share claim.

5.3 Gifts Under Special Circumstances
Gifts given as part of legal obligations (e.g., alimony or maintenance payments) are not considered.

 
6. Steps for Claimants
6.1 Investigate Lifetime Gifts
Mandatory share claimants should investigate whether the deceased made significant gifts during their lifetime. This can include reviewing financial records, property transfers, and insurance policies.

6.2 Request an Estate Inventory
Claimants can request an official estate inventory (Nachlassverzeichnis) that includes details of gifts given by the deceased.

6.3 File a Supplement Claim
If eligible gifts are discovered, claimants can file a Pflichtteilsergänzungsanspruch to ensure these are included in the mandatory share calculation.

 
7. Steps for Heirs or Gift Recipients
7.1 Document Gifts
Recipients of significant gifts should keep detailed records, including the date, value, and purpose of the gift.

7.2 Negotiate With Claimants
Heirs or gift recipients may negotiate with claimants to settle disputes amicably, potentially offering a portion of the gift’s value.

7.3 Seek Legal Advice
Inheritance lawyers can help navigate disputes involving lifetime gifts and mandatory share claims, ensuring compliance with the law.

 
8. Conclusion
Assets given as gifts before death can significantly affect mandatory share calculations under German inheritance law. The Pflichtteilsergänzungsanspruch ensures that claimants are not disadvantaged by gifts that reduced the estate's value. Understanding the 10-year rule and its exceptions is essential for both heirs and claimants to manage their rights and obligations effectively. Consulting legal professionals is recommended to resolve complex situations involving lifetime gifts and inheritance claims.