Gift in Case of Death

A gift upon death is a bilateral gift contract concluded during the donor’s lifetime. The donor undertakes to transfer a specific item to the donee free of charge only after their death. Until then, the donor retains full power of disposal.

Unlike a will, this arrangement is not unilaterally revocable. Upon conclusion of the contract, the donee acquires an enforceable claim that becomes due only upon death. In the event of inheritance, they are considered not an heir, but a creditor of the estate.

Legal Basis of the Gift upon Death

The gift upon death has been expressly regulated in Austrian inheritance law since 2017. According to § 603 ABGB, it is a legal transaction established inter vivos but subject to a suspensive condition.

For such a gift to be valid, the following conditions must be met:

• Contract with Acceptance: There must be a consensus of wills between the donor and the donee.
• Form of Notarial Deed: The entire contract – including acceptance – must be notarized. Subsequent contract amendments also require the form of a notarial deed.
• No Reservation of Revocation: The donor may not reserve a general right of revocation. A contractual withdrawal clause renders the gift invalid.

If these conditions are met, it constitutes a legally binding asset transfer that automatically becomes effective upon death.

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Effects before Death

Despite the binding effect, the donor remains the owner of the promised item and can generally continue to use it, e.g., rent it out or manage it. However, they may not do anything that frustrates the fulfillment of the contract, such as gifting or selling the item. If it is nevertheless disposed of to third parties, a claim for damages arises for the donee against the estate.

Effects after Death

Upon the donor’s death, the obligation becomes due: The donee now has an enforceable claim for surrender. They do not have to be an heir but can use the contract together with the death certificate to apply for, for example, entry in the land register.

Important: The item remains part of the estate and may be encumbered by debts. Creditors of the deceased take precedence. The donee must therefore wait to see if the estate is sufficient to satisfy their claim.

Compulsory Portion Law and the “Free Quarter”

The following also applies to gifts upon death: The deceased may not dispose of their entire assets. By law, one quarter must remain unencumbered, the so-called “free quarter”. It serves to protect those entitled to a compulsory portion.

If this minimum is not met, heirs can contest the gift. The donee may have to surrender parts. Furthermore, the transfer is credited against compulsory portion claims. Depending on the time of the gift, even in full.

Subject of the Gift

The subject of a gift can be any item in circulation, provided it has economic value. This includes both tangible and intangible items. For example, cash, furniture, photo albums, or company shares can be gifted.

There must always be an intention to donate. If someone transfers something due to an obligation, it is not a gift.

Land Register Entry of the Gift upon Death

The gift upon death itself cannot be entered in the land register as there is no specific entry form for this type of contract.
An annotation regarding ownership restriction in the land register is also not permissible. This means: The donee has no land register protection before the donor’s death.

Impact on Compulsory Portion Claims

The gift upon death is treated in the calculation of the compulsory portion like any other disposition upon death. This means:

• Crediting: The promised transfer is fictitiously added to the estate, as if it had been made at the time of death.
• Reduction of the Compulsory Portion: If the deceased exceeded the “free quarter” with the gift, this can lead to violations of compulsory portion rights.
• Crediting against Compulsory Portion: The value of the gifted item must be deducted from the donee’s compulsory portion claim if the donee is themselves entitled to a compulsory portion.
• Right of Action for Other Compulsory Heirs: If the compulsory portion is violated, disinherited relatives may, under certain circumstances, assert claims for surrender against the donee.

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Legal Position of the Donor

Until the time of death, the donor remains:

• unrestricted owner of the gifted item,
• entitled to use (e.g., income, use)
• but obliged to refrain from anything that jeopardizes the fulfillment of the contract.

For example, they may not gift, sell, or encumber the item if this would frustrate the contract.
If the donor violates this obligation, the donee (or their heirs) can claim damages against the estate.

Important:
The donor cannot reserve a contractual right of withdrawal. Subsequent unilateral changes are also legally ineffective, unless they have been re-agreed in the form of a notarial deed.

Legal Position of the Donee

Upon conclusion of the contract, the donee acquires:

• a claim secured by the law of obligations to the transfer of the gifted item,
• which becomes due only upon the donor’s death.

They do not automatically become the owner, but must, for example, assert the claim for real estate, e.g., through a land register entry upon presentation of the contract and the death certificate.

Important:

• The donee is not an heir, but a creditor of the estate.
• Their claim takes precedence over a legatee, meaning it must be satisfied preferentially.
• Against third parties to whom the gifted item was unlawfully transferred, a claim exists only exceptionally, e.g., in cases of interference with third-party claims.
• The donee can also invoke the contract even if they were unworthy of inheritance, as it is not a testamentary disposition.

Suspensive Effect

The gift upon death takes effect only upon the donor’s death (it is therefore subject to a suspensive condition).
This means:

• The donee initially acquires only an expectation under the law of obligations.
• No ownership, no power of disposal, and no right of entry before death occurs.
• No access by creditors of the donee as long as the death has not occurred.

The legally relevant time for the gift is the time of death, not the time of contract conclusion. This is particularly important for calculating the compulsory portion and for determining when a gift is considered “made”.

Differences from other Forms of Asset Transfer

Will

A will is a unilateral, revocable declaration of intent. It is usually drawn up handwritten or before a notary and only takes effect after death.
Difference from a gift upon death: A will requires no contractual partner and can be changed or revoked at any time without the consent of others. The gift upon death, however, is contractually binding and can only be revoked by mutual agreement.

Inheritance Contract

An inheritance contract is a bilateral contract between spouses or fiancés that bindingly regulates the estate (in whole or in part). It is also subject to a notarial deed.
Difference from a gift upon death: The inheritance contract typically concerns the entire assets, whereas the gift upon death concerns individual assets. Furthermore, an inheritance contract cannot be concluded with just anyone – a gift, however, can.

Transfer upon Death

Here, an item is physically handed over during the transferor’s lifetime, with the agreement that it may be finally retained only after the transferor’s death.
Difference: The transfer upon death is legally ineffective unless formally structured as a testamentary disposition. It lacks the contractual security of a gift upon death – especially for real estate, there is no legal protection for the recipient.

Instruction upon Death

This involves an instruction to a third party to transfer an item to a specific person after the donor’s death.
Difference: The beneficiary has no direct claim against the estate. The gift upon death, however, grants a legally enforceable claim arising from a contract.

Debt Forgiveness upon Death

Debt forgiveness upon death means that the creditor declares to waive a claim upon their death.
Difference: According to the prevailing opinion, it is not a gift, and the transaction is not subject to formal requirements. The legal basis is unilateral – in contrast to a gift upon death as a bilateral contract.

Gift with Suspensive Condition

Gifts can be linked to conditions (e.g., care obligation) that become effective upon their occurrence.
Difference: If the suspensive condition refers to the donor’s death and no notarial deed form is chosen, invalidity is threatened. Only if the strict formal requirements are met and without reservation of revocation can such an arrangement be considered a gift upon death.

Gift with Retention of Rights

Here, an item is transferred during the donor’s lifetime, however, subject to the reservation of rights – e.g., usufruct, right of residence, or prohibition of alienation.
Difference: The gift is immediately effective; the donee already becomes the owner, even if the donor retains the use. With a gift upon death, the donor remains the owner until their death.

Your Benefits with Legal Assistance

Our firm assists you with the legally secure drafting of gift upon death contracts. We examine formal requirements, compulsory portion protection, and tax aspects.

Contact us for a non-binding initial consultation.
Avoid formal errors, protect your assets, and ensure clear arrangements.

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