OGH on ‘Wealth Sacrifice Theory’ and Estate Gifts

Jan 26, 2024 Benn-Ibler Rechtsanwälte

Pursuant to Section 782(1) of the Austrian General Civil Code (Allgemeines Bürgerliches Gesetzbuch, hereinafter ABGB), gifts made by a deceased person to individuals who are not entitled to a compulsory inheritance portion in the last two years prior to the deceased’s death are to be included in the calculation of the estate.

The plaintiff was born to the testator, who died in 2021. In his will, due to a lack of contact for decades, the testator reduced his son’s compulsory portion by half.

The defendant is the sole heir of the testator. In 2016, the testator bequeathed two properties to the accused. It was agreed and registered in his favour that he would have a lifelong right to use the property free of charge and that he would not be encumbered by any encumbrances or be able to sell it. Furthermore, there was also an agreement as to the right of reversion in the event of the defendant’s death. Both properties were to revert to the testator in the event of the defendant’s premature death.

The plaintiff demanded the addition of the gift pursuant to Section 782 (1) of the ABGB and claimed payment of the compulsory portion in the amount of EUR 100,000 from the defendant pursuant to Section 789 (1) of the ABGB.

The action was dismissed by both the first instance and the appellate courts. The decision of the lower courts was confirmed by the Austrian Supreme Court (Oberster Gerichtshof, OGH).

A gift is considered to be ‘really made’ if the donor has definitively sacrificed the property (this is referred to as wealth sacrifice theory, Vermögensopfertheorie.[1]) In the case of a gift of real estate, a property sacrifice has been made even if the donor retains a right of use over the real estate, including a prohibition on encumbrance and sale.

The same applies to the agreed right to reversion, since reversion was only provided for if the defendant predeceased the testator. Since the reassignment did not depend on the will of the testator, the sacrifice of the property had already taken place in 2016. The plaintiff is therefore not entitled to demand that the two properties be added to the estate.

OGH 2 Ob 210/23f (21 November 2023)

[1] In Austrian inheritance law, the Vermögensopfertheorie is important in connection with potential violations of the compulsory inheritance portion. The law provides for a period of two years within which the gifted inheritance can be challenged.