The initiation of the inheritance proceedings and the related first hearing in court can bring with it several surprises or unexpected situations for the heirs. In practice, it often happens that one of the heirs (or even a third person, not even necessarily related to the deceased) explains at the hearing that the deceased had already during his lifetime by a contract of lifelong maintenance given him/her some of the estate (often real estate), so that there is in fact no estate and the other heirs inherit nothing, unfortunately not even the statutory portion of the estate.
The Contract of Lifelong Maintenance
According to the Obligations Code, a party (the maintaining party) may, by means of a contract of lifelong maintenance, undertake to maintain another party (the maintained party), and the maintained party declares that he/she bequeaths to him/her all or part of the estate, comprising immovable and movable property intended for the use and enjoyment of the real estate.
Since the delivery of the intended property and the related real estate transfer is itself deferred until the death of the maintaining party, the fact of a life maintenance contract (except if prohibition of alienation and encumbrance are recorded in the land registry) may be concealed and is not apparent from the land registry data either.
It should be noted in this respect that a contract of lifelong maintenance is of gainful nature and, consequently, the property which is the subject of that contract is excluded from the estate in its entirety. It is common for such contracts to be concluded at the advanced age (and associated frail health) of the maintained party, which means that the maintaining party is obliged to provide the agreed care and nurture for an extremely short period of time but receives a large amount of property in return, nonetheless.
Challenging the contract
Challenging the contract of lifelong maintenance is unfortunately extremely difficult, since case-law has, inter alia, already taken the view that a contract of lifelong maintenance concluded with a seriously (terminally) ill maintained party is not (necessarily) void per se if the maintained party intended by such a contract to ensure the life-long care and maintenance of a specific person with whom he/she has a special emotional bond.
Contracts of lifelong maintenance are therefore also permissible where, in view of the expected death of the maintained party, it is possible to determine in advance the extent and duration of the maintaining party’s obligations, i.e. contracts which are not aleatory. In these cases, it is consequently also not possible to prove the fictitious nature of such a contract (which might conceal the purpose of the gift and would not constitute a transaction for consideration).
Gift
Only in situations where the circumstances of the case allow for the conclusion that a gift was in fact made (and this can be proved) may the heir, on the ground of the fictitious nature of the contract, seek a declaration that it is null and void (taking into account Article 110 of the Inheritance Act) and claim the restitution of the gift to the estate to the extent that it will enable him to cover his statutory portion of the estate.
Being of sound mind
It is also worth pointing out that one of the prerequisites for the valid conclusion of the aforementioned contract is being of sound mind. Although the latter is not expressly provided and is not a prerequisite for the conclusion of a contract in the legislation, it is considered by theory[1] and case-law[2] to be a prerequisite for the valid conclusion of a contract. Being of sound mind is the actual ability to validly express will. If a person is not of sound mind, the declaration of his will has no legal effect and such a contract is void or, according to the legal doctrine, tantamount to a null and void contract. Therefore, in cases where the interested heir has information and evidence that the deceased was not of sound mind at the time the contract was concluded (for reasons of health, say dementia), he may claim the nullity of such a contract and the restitution of the property that is the subject of the contract back to the estate.
Written by: Ines Rostohar
[1] N. Plavšak, Obligacijski zakonik s komentarjem, str. 328 in 329.
[2] E. g. Judgement of the Supreme Court of Slovenia, no. II Ips 450/2005 from 23. 2. 2006.