Deferral of the Compulsory Portion
Deferral of the Compulsory Portion
Compulsory portion claims can quickly put heirs in financial distress, especially if the inherited assets consist primarily of real estate, company shares or agricultural properties. In order to avoid the breakup of such assets, Austrian inheritance law provides for various ways to defer the compulsory portion, i.e. to postpone it in time or to pay it in installments.
Peter HarlanderHarlander & Partner Rechtsanwälte „Die Stundung des Pflichtteils ist kein Schlupfloch für säumige Erben, sondern ein gesetzlich anerkanntes Instrument zur Wahrung wirtschaftlicher Substanz, vorwiegend bei vererbten Immobilien oder Betrieben.“
The deferral is a postponement of the payment obligation, either by testamentary disposition or by court decision. The compulsory portion is not cancelled, but merely fulfilled later, either in one lump sum or in installments. A judicial adjustment or extension is also possible in certain cases.
The deferral of the compulsory portion makes it possible to spread or postpone the payment of the compulsory portion over several years in order to avoid an economic overload of the heir.
Due Date and Enforcement
The compulsory portion claim arises upon the death of the testator. However, the law provides for a waiting period: The entitled party can only assert his monetary claim
Important: The claim exists from the moment of death. Also, default interest accrues from this point in time.
Post-mortem Deferral
The testator can stipulate in his will that the compulsory portion is not paid immediately, but only after up to five years. Installment payments may also be ordered by will.
- A justification is not required by law.
- The entitled parties can only demand the compulsory portion after the specified period has expired.
- In the case of a deferred testamentary disposition covering the compulsory portion, its fulfillment can also be postponed.
Objection in case of unfair hardship:
Entitled parties can raise objections in court if the deferral places an unreasonable burden on them, for example if they need the compulsory portion for their own livelihood.
In this case, the court may:
- Revoke or adjust the deferral arrangement
- Determine a different interest rate
- Extend the deferral for up to ten years
Judicial Deferral
If the testator has not ordered a post-mortem deferral, the heir can apply to the court for a judicial deferral. The prerequisite is that the immediate payment of the compulsory portion would affect him unfairly hard.
Typical examples:
- The estate contains an apartment that the heir urgently needs to live in himself
- The heir would have to sell a company that secures his economic existence
- The continued existence of a business would be jeopardized (e.g. by forced sale of business assets)
In such cases, the court may:
- Defer the payment completely or partially
- Order an installment payment
- Limit the deferral to a maximum of five years
- Extend it to a total of ten years in exceptional cases
Even in the case of judicial deferral, interest starts to accrue from the date of death of the testator. The decision is made in contentious civil proceedings.
Adjustment or Cancellation
If the economic circumstances change significantly, for example due to the sale of the deferred asset or due to changed income circumstances, the court can adjust or cancel the deferral arrangement.
- The application can be made by the heir or by the entitled party.
- The prerequisite is a serious change in circumstances.
- The court also decides in contentious proceedings.
In addition, there is a legally standardized duty to inform: Compulsory portion debtors and creditors must inform each other about relevant changes. In the event of a breach of duty, claims for damages are conceivable.
Securing the Compulsory Portion
In the event of a deferral, entitled parties can apply for their claim to be judicially secured, for example by mortgage, guarantee or other security. The court does not have to determine any particular risk, the application alone is sufficient.
Limitation Period of the Compulsory Portion Claim
The general limitation periods apply:
- 3 years from knowledge of death and disinheritance or impairment of the compulsory portion
- 30 years absolute period from death
Ongoing deferral proceedings can suspend the limitation period.
Your Benefits with Legal Assistance
The deferral of the compulsory portion opens up important design options, but only if it is implemented correctly in law. Whether it is the formulation of a post-mortem deferral order or the judicial enforcement in the event of inheritance: The support of an experienced lawyer brings clarity and security.
What you gain with legal advice:
- Risk minimization: We check whether a deferral is legally possible and avoid formal errors that could lead to invalidity.
- Individual solution: We design deferral arrangements so that they fit your economic and family situation.
- Procedural security: In court proceedings, we take over the application, represent you in the proceedings and observe all deadlines and justification obligations.
- Avoidance of disputes: Through timely advice and clear formulations, conflicts with entitled parties can often be avoided.
Sebastian RiedlmairHarlander & Partner Attorneys „Ob testamentarisch verfügt oder gerichtlich beantragt, bei der Stundung des Pflichtteils ist präzise juristische Gestaltung entscheidend, um spätere Streitigkeiten oder Unwirksamkeit zu vermeiden.
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