The inheritance contract remains a little-known instrument of property disposal, although the legislation has provided for it for more than two decades. Its essence is that the parties enter into an agreement, which provides for the transfer of inheritance, subject to the fulfillment of certain obligations. It is concluded by a notary, enters into force immediately after signing and requires extremely accurate recording of obligations. In the practice of lawyers, an inheritance contract occurs less often than other transactions, but it raises many questions for those who plan to conclude it.
The editors of IA “FAKT” turned to the lawyers of the “Repeshko and Partners” Bar Association, who regularly accompany such issues, in order to find out how inheritance contracts are concluded in practice, what obligations are assumed by the parties, and how it differs from a life maintenance contract.
The issue of inheritance is quite sensitive and always very relevant. Almost half of consultations with lawyers are about inheritance in one form or another. It seems that everyone and almost everything knows about it. But there is still one section in the Civil Code of Ukraine (CC), which is not very popular and for many it is generally exotic. This is an inheritance contract.
The legal side of the inheritance contract is regulated by Chapter 90 of the Civil Code of Ukraine (CC of Ukraine) and the Procedure for Notarial Acts by Notaries of Ukraine, approved by the Order of the Ministry of Justice of Ukraine dated February 22, 2012 No. 296/5. Although the contract is called hereditary, the norms of inheritance law do not apply to it. According to the law, under the inheritance contract, one party (the acquirer) undertakes to carry out the instructions of the other party (the alienator) and in the event of his death acquires the right of ownership of the property of the alienator. Simply put, a diligent acquirer is promised certain property of the alienator for certain actions.
The specified type of contract appeared in the Central Committee of Ukraine because, according to the intention of the legislators, the scope of its application in practice will mainly concern spouses and other persons who live together and do not have children, but want to guarantee the rights and support of each other after death. According to the law, the alienator in the inheritance contract can be: both spouses, one of the spouses or another person. At the same time, the acquirer in the inheritance contract can be an individual or a legal entity.
The inheritance contract is concluded in writing and is subject to notarization, as well as state registration in the Inheritance Register in of order, approved by the Cabinet of Ministers of Ukraine. This contract is certified by a notary only in the presence of both interested parties: the acquirer and the alienator. The inheritance register is an electronic database that contains information, in particular, on certified inheritance contracts. If the parties fail to comply with the specified requirements, the inheritance contract is considered null and void.
As you can see, the subject of the inheritance contract can be any property – both movable and immovable. Whether it should have significant value is also not determined by law. However, usually the subject of the inheritance contract is real estate – an apartment or a residential building. Inheritance contracts, the subject of which is immovable property, are certified by a notary in compliance with the general rules for certifying alienation contracts. At the same time, when certifying inheritance contracts, the rules for ensuring the right to purchase a share in the right of joint partial ownership do not apply. Therefore, it is not necessary to follow the rules when you need to ask the co-owner if he does not want to buy your share of the property, as in the case of a sales contract.
The law separately prescribes a rule regarding the property of the spouses. The subject of the inheritance contract can be property that belongs to the spouses under the right of joint co-ownership, as well as property that is the personal property of any of the spouses. An inheritance contract may establish that in the event of the death of one of the spouses, the inheritance passes to the second, and in the event of the death of the second spouse, his property passes to the acquirer under the contract.
The title document certifying ownership of the alienator’s property is returned to the property owner (alienator) after its examination by a notary, and the title of this document, the number and date of its issuance, and the name of the legal entity that issued it are indicated in the text of the contract. If the subject of the inheritance contract is property, the right of ownership of which is subject to state registration, the notary in the text of the contract notes the need to register the right of ownership in the State Register of Property Rights to immovable property, but only after the alienator’s death.
What exactly does the acquirer need to do under the inheritance contract? Article 1305 of the Civil Code of Ukraine stipulates that the acquirer in the inheritance contract may be obliged to perform a certain property or non-property action before the opening of the inheritance or after its opening. The specified actions must be carried out depending on the orders of the alienator, before or after his death. Based on the norms of the Central Committee of Ukraine, it is understood that the acquirer fulfills the obligations assigned to him by the contract at his own expense and does not have the right to reimbursement of expenses and payment of remuneration at the expense of the property assigned to him by the alienator.
In turn, the alienator has the right to appoint a person who, after his death, will supervise the execution of the inheritance contract. In the absence of such a person, the control over the execution of the inheritance contract is carried out by a notary at the place where the inheritance was opened. On the property that is the subject of the inheritance contract, the notary imposes a prohibition of alienation in the prescribed manner, which is written on all copies of the contract. After the death of the expropriator, on the basis of the death certificate of the civil status authority, the notary removes the prohibition of alienation.
If the alienator made a will, then this document, which the alienator made regarding the property specified in the inheritance contract, is null and void, regardless of whether it was drawn up before or after the certification of the inheritance contract. At the same time, it is important to know that the right to a mandatory share in inherited property also does not extend to the property that is the subject of the inheritance contract!
Since there are no inheritance relations when applying the inheritance contract, when the ownership of the property that is the subject of the inheritance contract is transferred, the acquirer is not obliged to satisfy the claims of the alienator’s creditors. Such an obligation is imposed by law exclusively on the heirs of the deceased owner.
An important point is that the inheritance contract can be terminated by the court at the request of the expropriator in case of non-fulfillment of his instructions by the transferee or at the request of the transferee in case of impossibility of fulfilling the instructions of the transferor.
The contract also terminates in the event of the death of the natural person of the acquirer or the liquidation of the legal entity — the acquirer under the inheritance contract, and the notary shall make a corresponding inscription on the copies of the contract at the written request of the alienator.
An inheritance contract can be declared invalid on the general grounds defined by Article 215 of the Civil Code of Ukraine, namely: the ground for the invalidity of the deed is non-compliance by the party (parties) with the requirements established by Article 203 of this Code at the time of the deed. They define:
- The content of the transaction cannot contradict this Code, other acts of civil legislation, as well as the interests of the state and society, its moral principles.
- The person who commits the deed must have the required amount of civil legal capacity.
- The expression of will of the participant in the transaction must be free and correspond to his inner will.
- The act must be aimed at the actual occurrence of legal consequences caused by it.
- The act committed by the parents (adoptive parents) cannot conflict with the rights and interests of their minor, minor or incapacitated children.
Another issue is also important. A deed is considered invalid if it is established by law (void deed). In this case, recognition of such a transaction as invalid by the court is not required. If the invalidity of the deed is not expressly established by law, but one of the parties or another interested person denies its validity on the grounds established by law, such a deed may be declared invalid by the court (disputed deed).
At the request of the acquirer, the inheritance contract can be terminated by the court both before the death and after the death of the alienator. For this, it must be established that he cannot fulfill the orders of the alienator. The inheritance contract can be terminated by the court at the request of the alienator in case of non-fulfillment of his orders by the acquirer.
We warn right away that both the expropriator and his relatives (heirs) have an indisputable right to sue for invalidity or non-fulfillment of the contract, this is guaranteed by the current legislation. The main thing is the question of the prospects of such a trial. Therefore, we recommend that you approach the conclusion of this agreement responsibly. If we are talking about the alienator, who is an elderly or seriously ill person who is prescribed specific drugs for treatment, then in order to minimize the risks, it is necessary to visit a doctor a few days before signing the inheritance contract and get a certificate from the hospital that the alienator is not registered in a psychoneurological dispensary, does not suffer from psychiatric diseases, in general, get a certificate about current diagnoses and prescribed drugs by a doctor.
What exactly can be included in the duties of the acquirer under the inheritance contract? The acquirer in the inheritance contract may be obliged to perform a certain property or non-property action before the opening of the inheritance or after its opening. At the same time, for example, in the inheritance contract it is possible to prescribe the same thing as in the contract of lifelong maintenance – provision of physical and material support to the alienator during his life, or installation of a memorial tombstone at the place of burial. At the same time, the inheritance contract may provide for the performance of an obligation in favor of one or more persons who acquire the right to demand its performance. For example, the alienator can oblige the acquirer to provide financial assistance to a granddaughter or nephew until they reach the age of majority. Also, the acquirer cannot be obliged to live in a certain place, to graduate from a certain educational institution, to refuse to further alienate the property that will become his property under the inheritance contract, etc.
If, according to the inheritance contract, the acquirer was obliged to perform certain actions after the death of the alienator, then in the event of the death of the acquirer, the obligation to perform these actions passes to his heirs.
So, the inheritance contract is somewhat similar to the life maintenance contract. But these two treaties have significant differences.
Lifetime maintenance (care) contract is a deed by which one party (the alienator) transfers to the other party (the acquirer) the ownership of a residential building, apartment or part thereof, other immovable property or movable property that has a significant value, in exchange for which the acquirer undertakes to provide the alienator with maintenance and (or) care for life.
The difference between a life maintenance contract and an inheritance contract is as follows:
- At the time of acquisition of ownership. According to the contract of lifetime retention, the acquirer’s right of ownership arises from the moment of certification of the contract (in cases established by law – from the moment of state registration of the contract), i.e. the title document for the property is immediately issued to the acquirer, and the documents of the alienator are repaid. At the same time, according to the inheritance contract, the right of ownership passes to the acquirer only after the alienator’s death. Title deeds to the property remain in the alienator’s name and in his hands. He remains the owner of the property for third parties until his death. The acquirer under this contract, during the life of the alienator, has only the possibility of acquiring the right to the property in the future, subject to the fulfillment of the requirements specified in the contract. It is this that can serve as an argument for an elderly person why it is worth concluding an inheritance contract, and not a lifetime maintenance contract. The property will remain in the person’s possession, but it will be subject to a lien and maintenance will be paid regularly.
- In the inheritance contract, the acquirer can perform his duties both before and after the alienator’s death. Instead, the lifetime maintenance (care) contract is terminated with the death of the alienator. The only exception is in accordance with the third part of Art. 749 of the Civil Code of Ukraine, the acquirer under the contract of lifelong maintenance (care) is obliged to bury him in the event of the alienator’s death, even if this was not stipulated by the contract.
Thus, the inheritance contract is not the most famous, but quite real way to agree on the transfer of property in advance and on clear terms. In some situations, it allows you to clearly record who will receive what and under what circumstances – without unnecessary misunderstandings and “verbal” obligations. It is worth at least knowing about this possibility and taking it into account when the question arises: how to properly dispose of what will remain after you.
