How to conclude an inheritance contract in Ukraine?
Many people know that a will is a way to dispose of their property. This option is convenient primarily for testators, because their rights are protected, and they may revoke the will or write a new one.
When a person dies without leaving a valid will, their property will be distributed in accordance with legal succession. Such a situation will also occur if:
- The will will be declared invalid;
- The heir under the will will not accept or will renounce the inheritance;
- The will will not cover the entire inheritance.
But there are cases where there is no one to make a will to, or you do not want to leave your property to relatives - legal heirs. Or there is a desire to provide for themselves through the receipt of funds on account of the transfer of existing property after death.
Then you draw up an inheritance contract. What it is, and how to make it right, we will tell in this material. If you have additional questions, or if you want to take care of your property, please contact our experts for personal advice.
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What is an Inheritance Contract and how does it work?
The concept of inheritance contract appeared in our country not that long ago - with the adoption of the New Civil Code of Ukraine, which entered into force on January 1, 2004.
In Europe, this issue has long been resolved at the legislative level, although the attitude to it varies. For example, in France it is allowed to conclude such an agreement only between spouses. It can rather be considered as a gift between two living spouses in case of death of one of them.
In our country the legislator’s attitude is similar - the Supreme Court of Ukraine in its decision considers transfer of property from the transferor to the assign on the basis of the inheritance contract, not as a separate type of inheritance. And that is why the relations of the parties are not subject to the relevant rules on inheritance.
One of the parties to the contract assumes the obligation to fulfill certain orders of the other party, and after the death of the second party - receives the right of ownership to the property specified by the second party.
Such a contract must be in writing and certified by a notary. If these conditions are not met, the contract is considered invalid.
Substantial conditions of the inheritance contract are as follows:
- information on the property which, upon the death of the transferor, will become the property of the transferee;
- a clearly defined list of actions to be performed by the transferee in accordance with the terms of the agreement (type, nature, list, timeframe for their performance).
The contract may also specify other clauses, if they are important to one of the parties and do not contradict the law.
The contract must be registered in the registry, which is an electronic database containing information on certified (drawn up and/or accepted for safekeeping) wills and inheritance contracts, inheritance files and certificates of right to inheritance. It must include information on the state registration, amendment and termination of inheritance contracts.
Our company by proxy will be able to carry out these actions, understanding the process and the necessary algorithm for the successful completion of such registration. Usually, this procedure does not take more than a day, but only if the original documents are executed correctly.
For example, a power of attorney form may be entered in the registry under a different name, and then the execution of actions for entering information in the Inheritance Register will be postponed until all the inaccuracies have been corrected. You will need to contact the notary who registered the power of attorney, and request that the inaccuracies be corrected. If the notary still works, add another day to the deadline. If these are old documents, or if the notary doesn’t work anymore for any reason - you will need to contact the Archive or the Ministry of Justice.
By initially entrusting the case to the professional lawyers of our company you will be protected from such unpleasant surprises, because we have an insider's knowledge of the procedure and pay attention to all the details.
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What conditions can be stipulated in the inheritance contract?
The transferee may be obliged to perform any actions of a property or non-property nature. Conditions degrading the honor and dignity of the transferee or restricting his/her civil legal capacity are an exception. For example, one cannot be forced to live with the transferor or in a certain place, to acquire a certain profession or graduate from a certain educational institution, to get married, to have a child, etc.
The obligations may include periodic payments in a certain amount to the transferor, or, for example, the obligation to make repairs, pay for utilities, carry out burial in a certain order and place, etc.
As can be seen from the above examples, such actions (of property or non-property nature) may be provided for in the inheritance contract and in the context of time - both before the death of the transferor and after his/her death. All conditions and wishes of the parties must be clearly and specifically described in the contract.
Inheritance contracts can also be the option for the owner of the property who wishes to receive a life care, but is wary of drawing up such a contract. The whole point is that, unlike the life care contract, upon its certification, when the inheritance contract is concluded, the title to the property, which is its subject, passes to the transferee only upon the death of the transferor.
Are there any risks to the parties when entering into an inheritance contract?
The legislator has not clearly defined what kind of property can be the subject of the inheritance contract. The correlation between the value of the alienated property and the transferee’s obligations is not regulated either. Therefore, the subject of the inheritance contract can be any valuable property, and there is no binding of this value to the actions of the transferee within the framework of obligations under the contract.
It turns out that the inheritance contract has a risk factor, because at the time of its conclusion the extent of rights and obligations is unknown: the transferee can foresee neither the amount of expenses related to the execution of dispositions of the transferor, nor the value of the property at the time of the transfer of the ownership right to it. And, actually, there is a risk of never getting the property mentioned in the agreement, since the transferee might die before the transferor does.
But in order to comply with the parity of the parties, there is also a certain rule, which protects the transferee’s rights.
If a transferor under an inheritance contract makes a will on the property named in the contract, that will will be considered invalid.
Speaking of the parity of parties to the contract, it is necessary to remember that the inheritance contract may be terminated by the court at the request of the transferor (in case the transferee fails to fulfill his/her obligations), or at the request of the transferee (if it is impossible for him/her to fulfill the transferor’s instructions).
Also, in order to ensure that the transferor properly performs his/her duties, the notary who certifies the inheritance contract limits his/her right to dispose of the property that is the subject of the contract by imposing a ban on the alienation of the specified property.
This is a guarantee for the transferee against the bad faith or “forgetfulness” of the transferor. For example, an inheritance contract was made, and then the relatives came, agreed that the owner of the property will be placed in a private country house for the elderly with excellent facilities, will visit him, and he will live like in a resort. But the condition of such a miracle relocation will be the sale of the apartment. Thus, the prohibition on alienation will protect the transferee from such unpleasant surprises.
In order that the notary does not “forget” on his or others’ will to impose such a ban - we accompany the entire procedure, and take responsibility for the result.
How does it work in practice?
The specialists of our company have successfully resolved the issue related to the inheritance contract, with which the Client approached us in the winter of 2022. Due to problems in the client-bank system, the payment under the inheritance contract wasn’t transferred.
It took a long time for the Client to find out that this failure had occurred. Thus, the contract was in breach at the time of the Client’s request and the Client was afraid that this breach would prevent him from obtaining the property under the contract in the future.
Having studied the inheritance contract, our lawyers suggested an option that fully satisfied the Client and secured the situation. We offered to discuss the situation with the transferor, and since he was interested in further receiving the funds as provided by the inheritance contract, he willingly agreed to go to the notary and to sign a notarial statement.
The proposed document, which was subsequently drafted and certified by the notary, was included in the inheritance file.
An inheritance contract is a solution that can benefit you today. If you would like to learn more, or to have documents analyzed and drafted specifically for your situation, don’t hesitate to contact us.
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