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Donation and 10-year deadline or need for assistance

June 9, 2016 | 35,00 EUR | answered by Jan Wilking

Hello,

the situation is as follows:
Parents A and B have three children, namely C, D, and E.
A and B started early to divide a part of their wealth equally among the children.

By the year 2006, most of the gifts had been given. The status at that time:
C received cash amounting to 140,000 euros.
D received an apartment worth 140,000 euros.
E received cash amounting to 120,000 euros.

The parents were aware that E still had to receive 20,000 euros. They see it as morally correct for E to be equally gifted as well. Thus, in 2006, E was promised the money once A and B accessed the fixed money they had set aside.
In 2009, there was an opportunity to hand over the 20,000 euros. However, it was agreed that A and B would retain the money for the time being so that renovations could be made to the house. In 2015, there was another opportunity, but due to renovations, the money was left as a "loan" with A and B. In 2016, the first 15,000 euros were actually given, and the remaining 5,000 euros are supposed to follow soon.

In the case of gifts in the event of later occurring need for assistance (social welfare), there is the well-known 10-year period.
My first question: When does the 10-year period start running in this case?
Parents A and B, as well as child E, naturally want to ensure that in the event of the parents needing assistance, all children contribute equally or depending on their income for the parents A and B, and that E should not be overburdened.

Is there any chance for E in the event of needing assistance to not have to use the 20,000 euros, so that all children C, D, and E can immediately contribute for the parents? As long as C and D cooperate voluntarily, this should not be a problem. However, in case of disputes or the discovery of the payment within the 10-year period, C and D would be "off the hook" and E would be the one at a disadvantage.

Jan Wilking

Thank you for your inquiry.

According to § 529 paragraph 2 of the German Civil Code (BGB), the claim is excluded if a period of ten years has elapsed since the provision of the gift at the time of need. The period starts from the moment the donor has done everything necessary for the transfer to take place.

In the case of a cash gift, execution means transferring ownership (§§ 929 et seq. BGB) of the banknotes; in the case of a transfer to an account, execution occurs when the bank executes the order.

If I understand your description correctly, in 2009 E did not yet have access to the money and there was no unconditional instruction from the parents to C and D to hand over the amount to E immediately. Therefore, I would assume that the deadline for the 15,000 euros only started with the actual payment in 2016, and for the missing 5,000 euros it only starts at the time of payment. However, a different situation may apply if E had access to the 20,000 euros earlier and then granted them to C and D as a loan.

Since the gifts were made sequentially, the most recently gifted person (E) is initially responsible. This is based on § 528 paragraph 2 BGB. The earlier recipient (C or D) is only liable to the extent that the obligation of the later recipient E does not cover the donor's emergency needs. In this regard, unfortunately, E would indeed be "the unlucky one" in the situation you described.

Best regards.