The inheritance law reform “Inheritance law new”, which has been effective since January 1st, 2017, has brought along some significant changes of the inheritance law in Austria.
Should a valid last will exist, it is necessary to bring the existing estate planning into accordance with the inheritance law reform. Regarding estate planning (e.g. testamentary dispositions, last wills, legacies, concluding of purchase and endowment contracts, endowments on death, concluding of waivers of inheritance and compulsory portion) it is strongly advised to get legal consultation. The consideration of inheritance law and a foresightful estate planning help prevent subsequent inheritance disputes and their consequential costs.
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The most important novelties, which are applicable to deaths as from January 1st, 2017, concern the following topics:
Since 2008, inheritance or endowment tax must no longer be paid in Austria. Nevertheless, inheritances and endowments as from a value of € 15.000,- must be reported to the tax authorities. Violating this reporting obligation results in substantial fines. For inherited real estate, property transfer tax must be paid in this case. Very often this property transfer tax was meant, if “Inheritance tax” had to be paid even after 2008.
People with a main residence abroad have to expect the inheritance tax that is charged in the foreign country. The EU inheritance regulation, which has been in effect since 2015, determines the place of residence as being decisive and not nationality. So-called double taxation agreements were made with non-EU members (e.g. USA, Switzerland, Liechtenstein etc.), in order to prevent the danger of double taxation.
The legal share is a minimum share in the inheritance of the deceased person which certain people are entitled to. These people even receive the legal share from the deceased person´s estate if they are not included in the last will. Since the new inheritance law became effective on January 1st, 2017, only the heirs and the marital partners or the registered partners are entitled to a legal share. There is no entitlement to a legal share for parents and other ancestors (e.g. grandparents).
The legal share quota consistently amounts to half of what the inheriting person would be entitled to in hereditary succession. Although life partners are not entitled to a legal share, they can under certain circumstances benefit from an “exceptional inheritance law” as well as being entitled to a temporal preference legacy. This is possible if there are no legal heirs (e.g. children) or heirs included in the last will. Due to new regulations, benefits (endowments, private foundations etc.), which the person entitled to a legal share already received during the testator´s lifetime from his/her fortune, can be considered in the assessment of the legal share. The legal share is immediately due after the testator´s death, but can only be demanded one year after his/her death. Generally, the legal share must be redeemed as money.
Disinheritance is the entire or partial withdrawal of the compulsory portion by testamentary disposition. It is only effective if there is a reason for the disinheritance. The inheritance law reform determines the new reasons for disinheritance. It is new now that you can also forfeit your title to an inheritance by committing criminal acts against relatives of the deceased person and gross misconduct of duties deriving from the parent-child-relation. Whereas the “persistent leading of a lifestyle that goes against general public morality” is no longer a reason for disinheritance.
Generally, only close relatives are entitled to a nursing legacy. This entitlement exists if the person cared for the deceased person to a greater extent at least six months before his/her death. Should the caring relative have already received grants from the inheritance in order to compensate these services, or if he/she has received a payment already during the lifetime of this person, he/she is no longer entitled to a nursing legacy.
Both for the testament written by yourself as well as for the testament written by someone else there are formal requirements which have to be fulfilled by all means in order to make the testament valid.
In the self-written last will it is necessary that the testator writes the entire text him/herself and signs the text at the end, so that there is no doubt regarding the testator´s identity. No witnesses are necessary for the self-written testament.
If the will is not written by hand, but by typewriter, PC or in a third person´s handwriting, you refer to it as a will written by someone else, which is subject to stricter formal requirements. The testament must be signed by the testator and must contain a handwritten amendment which points out that the document actually really contains his last will.
Furthermore, it is necessary to have the will signed by three witnesses, who have to be present at the same time, whose identity has to be clarified in the document. The witnesses merely confirm that it is the testator´s last will. In their own writing they have to point out their witness status as “requested testament witness”.
People under 18 years of age, blind people, deaf people, mute people as well as people who are not able to speak and/or understand the language in which the testament is written and so-called “biased” people cannot act as witnesses.
Since January 1st, 2017, last wills are automatically repealed by dissolution of marriage, registered partnership or life partnership during the testator´s life, which would have benefitted a former spouse, registered partner or life companion. If the testator desires the last will to remain valid despite a legal divorce, he/she must order that – for example already in the last will.
With the inheritance law reform „Inheritance law new”, a legal “exceptional inheritance law” for the life partner has been introduced for the first time. This only becomes effective if no legal heir is entitled and the life partner lived in the same household for at least the three years before his/her death. If there was no common household, substantial health-related or profession-related reasons must have existed. The proof of a “typical connectedness for life partners” must be provided. As from January 2017, also a legal preference legacy for the life partner is included, which is based on the preference legacy of the martial partners. The life partner is entitled to it if the prerequisites mentioned above are fulfilled and the testator was neither married nor lived in a registered partnership at the time of death. Compared to the preference legacy of a marital partner it is however limited and only entitles the life partner the right of residence in the shared apartment for one year.
Generally, the legal share becomes due with the testator´s death, however it can only be claimed one year after his/her death. Furthermore, by order of the testator (or by heirs´ claim), the legal share can be deferred for the duration of five years or an instalment payment can be agreed on, in order to prevent certain financial burdens of the heirs in connection with the legal share law. In certain cases, the court can decide a prolongation of the deferral up to a maximum of ten years. The purpose of the deferral is to delay the moment of enforcement of the compulsory portion. The fact that it is already due at the time of death remains untouched. In this case, 4 percent legal default interest must be added to the legal share as from the moment of death.