It is becoming increasingly common for testators to make early gifts of their assets. This is one of the best options for reducing compulsory portion claims and preserving freedom of disposal over their assets. However, the testator is not always satisfied with their decision to make a gift. In some cases, the testator wishes to have the object of the gift back or is dissatisfied with the person receiving the gift and wishes to cancel the gift for these reasons.
On what grounds can I revoke my gift?
With regard to the grounds for revocation of a gift, a distinction must be made between contractual and statutory grounds for revocation. It must first be checked whether the gift agreement concluded in each case provides for any cancellation clauses.
Examples of a right of reclaim in the gift agreement are
- Divorce of the recipient's marriage without a corresponding marriage contract that ensures that the gifted assets are taken into account in the equalisation of gains.
- The donee dies before the donor and is not inherited by descendants.
- The gifted property is sold or mortgaged without the consent of the donor.
- Personal insolvency or foreclosure of the donated assets.
- Behaviour of the donee that would justify a deprivation of the compulsory portion.
- The donor is no longer able to finance his or her reasonable maintenance at the standard of living to which he or she is accustomed.
If there are no contractual grounds for cancellation, the statutory provisions apply.
1. gross ingratitude on the part of the recipient
Gross ingratitude is probably one of the most important legal grounds for cancellation. This reason is set out in Section 530 (1) BGB. In the event of a legal dispute, gross ingratitude is assumed if the donee „reveals an ungrateful attitude through serious misconduct directed against the donor.“ This misconduct must be intentional and morally reproachable.
Gross ingratitude is assumed, among other things, in the case of:
- Threat to life
- Serious physical abuse
- Unfounded criminal charges
- Groundless applications for incapacitation or guardianship
- Serious insults
- Unmarried behaviour
- Foundation of a competitor company
2. impoverishment of the donor
Pursuant to Section 528 (1), the gift can be reclaimed if the donor is unable to provide for his reasonable maintenance after the gift has been executed and to fulfil his statutory maintenance obligations towards his relatives, spouse, life partner or former spouse or life partner, he can demand the return of the gift from the donee in accordance with the provisions on the return of unjust enrichment.
The return of the gift can be averted by providing the donor with the necessary funds to make up for their financial misery. Social welfare organisations are also increasingly resorting to this right of recovery. Due to the subordination of social assistance, social law allows for a corresponding transfer of the claim.
The claim for repayment due to impoverishment of the donor is excluded in accordance with Section 529 (1) BGB if the donor has caused his neediness intentionally or through gross negligence or if ten years have passed since the gift was made at the time of the donor's neediness.
3. discontinuation of the business basis
If none of the aforementioned statutory or contractual rights to reclaim are relevant, the principle of frustration of contract is of great importance. This concept is part of the principle of good faith and finds its legal framework in Section 313 BGB.
With regard to a gift, the Federal Court of Justice defines the basis of the transaction as the joint ideas of the donor and the donee at the time the contract was concluded, but which have not become part of the contract.
A reclaim for such a reason has so far been assumed in case law, particularly in the case of gifts between spouses, fiancés and partners.
A reclaim due to misuse is also possible. According to the principles of unjust enrichment law, someone who has received a gift from another person is obliged to return it if the intended result of the gift does not materialise. One prerequisite for this is the existence of a purpose agreement.
In practice, it is not uncommon for parents to make gifts not only to their children, but also to their spouses. Should a separation or divorce occur, the parents-in-law often wish to cancel the gift. In its judgement of 3 February 2010, the BGH opened up the possibility of revoking the gift to the child-in-law if it was expressly taken into account when the gift was made that the marriage could break down in the future and the child-in-law was informed of the parents-in-law's intention (ref.: XII ZR 189/06). In its judgement, the BGH stated that the basis of such a gift is regularly the marital partnership between the child and the child-in-law and therefore the child's own child benefits from the gift on an ongoing basis.
4. reversal despite Berlin will
In inheritance law in particular, there is still a possibility of reversal if a gift was made despite the existence of a Berlin will.
In accordance with Section 2287 of the German Civil Code (BGB), the contractual heir can demand the return of the gift if the testator makes a gift with the intention of impairing the contractual heir. In the case of a Berlin will, this applies to the appointed final heir or the last child to inherit.
When is the gift excluded?
Even in the case of gross ingratitude, the revocation of the gift is excluded in accordance with § 532 p. 1 BGB if the donor has forgiven the donee for his misconduct. For forgiveness to be assumed, the donor must demonstrate behaviour from which it can be concluded that he no longer perceives the behaviour of the donee as an offence.
Cancellation is also excluded if one year has passed since the donor became aware of the reason for the cancellation. Cancellation is also not possible if the donee is deceased. This means that the claim for restitution cannot be asserted against the heirs.
In the case of gifts of obligation or decency, cancellation in accordance with § 534 BGB is not possible.
When does the claim for restitution expire?
As already mentioned above, the claim to the return of the gifted object is excluded in accordance with Section 529 (1) BGB if ten years have passed since the gifted object was provided at the time the donor becomes needy.
The 10-year period begins from the date on which the gift is executed. With regard to a gift of real estate, the BGH stated in its ruling of 19 July 2011 (Ref.: X ZR 140/10) that this is already the case if the donee has submitted an application for registration of the change of title at the land registry, based on a proper gift agreement and conveyance.
The usual limitation period of three years in accordance with Section 195 of the German Civil Code (BGB) applies to the limitation period for the claim for repayment. The limitation period begins at the end of the year in which the claim arose and the donor learns of the circumstances that entitle him to cancellation. This also applies if the donor should have recognised these circumstances but failed to do so due to gross negligence.