Reclaim of a gift
Reclaim of a gift
(German Federal Supreme Court, X ZR 107/16)
The legal difficulties of a donor, which could arise in context with the reclaim of a gift, have been subject to a current decision of the German Federal Supreme Court – „BGH“ – (BGH, X ZR 107/16):
I. Facts
A couple had given to their daughter and her partner an amount of 104.000 Euro for the joint acquisition of an apartment in the year 2011. At that time, the relationship of the young people had already existed for 9 years and it seemed to be staple for the future. Contrary to expectation, the relationship broke down two years later. Saying that, the parents reclaimed half of the gifted amount from the former partner of their daughter.
II. Decision of the German Federal Supreme Court
Clarifying, in its decision the BGH points to the fact, that a donation, which is not explicitly agreed on under the correct usage of a legal reservation, generally cannot be reclaimed. The reason for that is, that the donation has been given to a person as a unilateral contribution and not because of a compensation agreed on. For the assumption of the legal criterion „gross ingratitude“, the simple dissolution of the relationship with the child of the donors is not sufficient. However, it is possible within narrow bounds to appeal on the legal institute of the „ceasing of the base of the transaction“. On this legal basis one of the involved party could reclaim the rescission of the original gift agreement, even when relevant circumstances have changed, which have not been made a legal part of the former agreement but which have been decisive for the conclusion of this agreement. In any case one of the parties can rely upon the institute when the dissolution of the relationship had appeared already shortly after the donation. However, the appeal on the legal institute „ceasing of the base of the transaction“ is not possible, when the broke of the relationship happened many years later after the donation was made.
III. Recommendation
Very often a donation between private persons is agreed on without any written document and without any consultation by a professional advisor. Generally, it has to be recommend to discuss the intended donation with a lawyer who is also familiar with the relevant tax issues. This includes especially a statement to the tax effects of the donation as well as a proposal for individual reserve clauses which have to be agreed on to avoid a risky and expensive confrontation outside and within the court.
Dr. Michael Knittel
LAWYER CERTIFIED SPECIALIST
TAX ADVISOR CERTIFIED PUBLIC ACCOUNTANT
Maximilianstraße 22, D-67346 Speyer
Tel. (06232) 679 52 55 Fax (06232) 679 52 45