It is common that ownership of real estate is to be transferred between spouses…
Many a marriage ends in divorce. It is not uncommon for people to remarry afterwards and sometimes this second marriage lasts. Often there are children from the first and the second marriage. In this situation, there may be a desire to protect and safeguard the second marriage as a so-called nuclear family under inheritance law. A concern behind this wish is also justified because the children from the first relationship remain legal heirs and have corresponding claims. If, for example, the man married in the second marriage dies without making an effective will, he leaves a community of heirs consisting of his wife, his children from the second marriage and his children from the first marriage. Experience shows that this rarely works out well.
Timely succession planning can help here. Several variants are conceivable. If all of the aforementioned persons are to be considered, the community of heirs, which is prone to disputes, can be avoided by designating one heir in a will, e.g. the second wife as the husband’s heir, and the other persons, i.e. in particular the children from the husband’s first marriage, with legacies. In the same will, the wife names the joint children as her heirs – depending on their age, possibly under execution of the will – and provides the husband with a legacy, e.g. usufruct of the house. The advantage of this is that the wife’s assets are not transferred to the husband in this way. Otherwise, the husband’s children from his first marriage would participate in his estate upon his death, e.g. by asserting claims to a compulsory portion.
Another variant is to provide for the children from the first relationship with advance gifts in such a way that in the event of inheritance their claims, in particular claims to the compulsory portion, are covered or at least greatly reduced. This can be achieved by always giving gifts with the verifiable stipulation that this will be done by offsetting against compulsory portion rights.
The most certain way to ensure that children from other relationships no longer interfere with the estate planning is to waive the compulsory portion of these children. Such a waiver must be notarised once the modalities have been determined. Experience shows, however, that no waiver of the compulsory portion is made without consideration, i.e. the waiving child will demand money for his or her waiver. How much that is remains a matter of negotiation. The current amount of the claim is only one criterion.
It is also conceivable that the relationship with the child or children from the first marriage has cooled down for whatever reason and they are not to be considered at all, not even within the framework of a waiver of the compulsory portion with settlement. In this case, there are some pitfalls to be aware of.
It would be too short-sighted for the spouses to appoint each other as heirs. For if the second spouse dies, this would not give rise to any claims on the part of the children of the longer-lived spouse from his or her first marriage, because there is no relationship of kinship between the testator and these children.
The problem, however, is that the assets now accumulate with the longer-living spouse with the consequence that – if he or she dies later – his or her children from the first marriage participate in this large estate with their compulsory portion claims.
The other way round is not without problems either: if the partner with children from the first marriage dies first, their compulsory portion claims can be very high and cause the asset situation of the longer-living partner to falter.
Which measures are to be used to counteract this is always left to an examination of the individual case.
Author: Dr Klaus Krebs