Contracts of Inheritance and Joint Wills
by Tobias Helms
1. Object and function
Many European states have two types of dispositions mortis causa other than a last will: contracts of inheritance and joint wills. A contract of inheritance is a contractually binding, ie not freely revocable, bilateral juridical act containing at least one disposition mortis causa. A ‘renunciative’ contract of inheritance (renuntiativer Erbvertrag), by means of which a future heir renounces his future claims under the law of succession (succession law), is not a contract of inheritance in this sense. The qualification of a gift mortis causa is problematic: it concerns a promise to bestow something, with the donor’s death being conditional for its enforceability. Due to its identical operation, such an act can be considered a contract of inheritance (under certain conditions: Germany: § 2301(1) Bürgerliches Gesetzbuch (BGB) and Switzerland: Art 245(2) OR). Some legal systems not recognizing contracts of inheritance nevertheless allow for contractual dispositions mortis causa in connection with marriage contracts (France, Belgium, Luxembourg, Spain, Portugal and, until 2003, the Netherlands). This is usually systematically considered as a gift mortis causa permitted, exceptionally, by the law (different in Portugal, see Art 1700 Código civil).
Joint wills exist in different guises and are either more closely related to a last will or to a contract of inheritance, depending on their configuration. First, there is what may be labelled as a coincidental joint will (testamentum mere simultaneum), in which the two dispositions are, on the surface, consolidated (usually in one deed), but otherwise have no relation with each other—like two ordinary, separate wills. Under what are known as reciprocal wills (testamentum reciprocum), the spouses remember each other in their will so that a certain, though rather weak, connection exists. In contrast, there is also the joint and mutual will (testamentum correspectivum), where the disposition of the one testator is dependent upon that of the other, so that the one cannot stand without the other. Legal systems which recognize this last type of joint will often make sure that the surviving spouse can no longer revoke his disposition after the first spouse’s death. In such a case, the joint will has effects comparable to those of a contract of inheritance.
Contracts of inheritance and joint wills lie at the intersection between two antagonistic fundamental principles: freedom of testation on the one hand (which champions the idea that dispositions mortis causa should generally be freely revocable) and freedom of contract on the other hand (which would appear to enable parties to enter into binding agreements even in contemplation of death). Under Roman law, contracts of inheritance were seen as an impermissible restriction on the freedom of testation, and they were therefore considered void. Even though the existence of a ban on joint wills under Roman law has not conclusively been proven, it appears that they did not occur in practice, which strongly suggests that they, too, were invalid.
At the same time, historical development has revealed that binding agreements concerning a person’s succession meet a practical need, in the first place, originally, to ensure the provision of the surviving spouse. For this reason, contracts of inheritance had already been common in Greek law; and they remained in use in the Greek provinces of the Roman Empire until the end of antiquity. It is thought that Roman lawyers construed this practice as an application of a donatio mortis causa. In some European regions during the Middle Ages it was common practice to make dispositions mortis causa in the form of a contract, especially in connection with marriage contracts. In France and Germany especially, the view was taken that contracts of inheritance could be recognized in contravention to Roman law, as long as they were permitted by a relevant custom or statute, because they violated neither the ius divinum (canon law) nor the ius naturale (natural law).
2. Comparative overview: contracts of inheritance
Many legal systems still consider contracts of inheritance as objectionable, as under Roman law, and explicitly deny their validity (Greece: § 1717 Greek Civil Code; Italy: Art 458 Codice civile; Poland: Art 1047 Kodeks cywilny; Sweden: ÄB 17:3 s 1). However, the legal consequences differ in their details: the conversion of a contract of inheritance into a will is often prohibited; however, this is acceptable under Portuguese law (Art 946(2) Código civil). Italian law is particularly strict: if someone has contractually committed himself to make a particular will, then even the will made in fulfilment of such agreement will be void unless it can be ruled out that the testator made the will because he considered himself bound by a contract he erroneously thought to be valid. In contrast, the invalidity of contracts to make a certain will does not extend to wills made in fulfilment of those contracts under Greek law, for example.
Other legal systems, on the other hand, permit contracts of inheritance within certain limits. Whereas contracts concerning the estate of a living person are also, in principle, forbidden under French and Belgian law (see Art 1130(2) of the French and Belgian Code civil), binding undertakings to leave the contractual partner one’s entire estate (or a part thereof) in case of death can be made in marriage contracts. At the same time, these undertakings can be made not just by one spouse for the benefit of the other spouse, but also by third parties for the benefit of the spouses or future children. Furthermore, spouses can also make a corresponding agreement by means of a donation mortis causa (Arts 1081 ff; 1091 ff French and Belgian Code civil), although this is freely revocable (Art 1096 French and Belgian Code civil). Such agreements are formally analysed as donation de biens à venir and thus considered to be contracts inter vivos. But in effect such agreements can be compared to contracts of inheritance and are consequently seen as an institution contractuelle in French doctrine. Portuguese and Spanish law offer comparable solutions, although only insofar as two persons effect the corresponding donations in a marriage contract prior to the wedding (Portugal: Art 1700 Código civil; Spain: Art 1341(2) Código civil). Hungarian law, on the other hand, recognizes contracts of inheritance as a subspecies of maintenance agreements and contracts of annuity for life. An heir appointed in a contract of inheritance has to grant the testator maintenance or an annuity for life as consideration (§ 655(1) Law IV/1959 concerning the Civil Code). But it is to be noted that the contractual partner, in turn, cannot make dispositions mortis causa.
Contracts of inheritance have traditionally played an important role in the Germanic legal systems: both German (§§ 2274–2300 BGB) and Swiss law (Art 494 Swiss Civil Code (ZGB)) and, following Swiss law, Turkish law (Art 527 Turkish Civil Code) accept contracts of inheritance as a common form of disposition mortis causa. Apart from contracts of inheritance between spouses, agreements by which the benefiting person undertakes to render services or to pay maintenance to the testator with the prospect of gaining an inheritance constitute a further practically important field of application. In contrast, contracts of inheritance are limited to spouses and fiancés under Austrian law (§§ 1249 ff ABGB) and are therefore considered to be part of matrimonial law rather than the law of succession. Apart from the appointment of heirs, legacies and burdens can be effected in a contractually binding manner in Germany, Switzerland and Turkey (Germany: § 2278(1) BGB; Switzerland: Arts 494, 482 ZGB; Turkey: Art 527 Turkish Civil Code). In addition, other (revocable) unilateral testamentary dispositions can be made (eg the institution of a testamentary executor). Although § 1249 ABGB only mentions the contractually binding appointment of heirs, Austrian literature generally also regards contracts relating to legacies as permissible.
English law does not recognize contracts of inheritance. However, it is possible to commit oneself contractually to allocate certain items from the estate to a certain person by way of making a will (‘contract to make a will’) or not to revoke a will or a particular grant under a will (‘contract not to revoke a will’).
b) The making of contracts of inheritance
Contractually binding dispositions mortis causa —insofar as they are permissible—are subject to special formalities in all European legal systems. In legal systems which permit contractually binding dispositions mortis causa only in conjunction with marriage contracts or—as in France—in the form of donations, these dispositions must fulfil the (notarial) form applicable to marriage contracts and donations.
Legal systems which accept contracts of inheritance as a general form of testamentary disposition usually subject them to similar formalities as the making of wills, although the holographic form is usually excluded and only the notarial form is recognized (Germany: § 2276(1) BGB; Switzerland: Art 512(1) ZGB; Austria: § 1 NotZwangsG in connection with § 67 Notariatsordnung). In contrast, no particular formalities are required for a binding promise to make testamentary dispositions under English law. The general regulations for the formation of contracts are applied.
Legal systems which recognize contracts of inheritance attribute binding force to them, so that no dispositions mortis causa deviating from them are possible (Belgium: Art 1083, 1093 Code civil; Germany: § 2289(1) BGB; France: Arts 1083, 1093 Code civil; Austria: § 1254 s 1 ABGB; Switzerland: Art 494 ZGB; Portugal: Art 1701 Código civil).
In contrast, a person who has concluded a contract of inheritance still retains the right to dispose of his estate inter vivos. Only gifts are considered differently, as the making of a gratuitous disposition inter vivos can undermine the obligations arising from a contract of inheritance: under French and Belgian law, a succession agreement contained in a marriage contract has wide-ranging binding force and excludes the respective parties’ right gratuitously to dispose of their estate inter vivos (both Arts 1083, 1093 Code civil). Similarly, gifts under Swiss law which are not compatible with the content of the contract of inheritance can be voided (Art 494(3) ZGB). In Austria, parties who have concluded a contract of inheritance are usually unrestricted in respect of dispositions inter vivos (§ 1252 ABGB), although certain restrictions can be agreed upon (see § 364c ABGB). In addition, the contracting person always retains the right freely to dispose of a quarter of the estate remaining after the deduction of liabilities and compulsory shares (§ 1253 ABGB). In contrast, under German law the contractual heir may demand from the receiver the return of all gifts that were made with the intention of prejudicing the contractual heir (see §§ 2287 ff BGB).
If a person under English law breaches his contractually assumed obligation to transfer certain assets by testamentary disposition, the aggrieved party will have claim against the estate (liability of heirs) for breach of contract. Dispositions inter vivos can also initiate claims for compensation, insofar as the person making the disposition has thereby breached his contractual obligations.
3. Comparative overview: joint wills
A similar picture arises as far as joint wills are concerned: the Romanistic legal systems forbid joint wills in tune with the Roman legal tradition (France: Art 968 Code civil; Italy: Art 589 [[Codice civile; the Netherlands: Art 4:93 [[Burgerlijk Wetboek (BW); Portugal: Art 2181; and Spain: Art 669 Código civil, but they are permitted in all foral jurisdictions with the exception of Catalonia and the Balearic Islands). Most of the other European legal systems also do not recognize joint wills (eg Poland: Art 942 Kodeks cywilny; Hungary: § 644 Law IV/1959 concerning the Civil Code; Greece: Art 1717 Greek Civil Code). Even a simple coincidental joint will (testamentum mere simultaneum) is frowned upon in order to exclude the possibility of undue influence upon the testator. Other arrangements by means of which testamentary dispositions are made dependent on each other—through conditional dispositions, for instance—(testamentum correspectivum) are also forbidden in some countries (Portugal: Art 2231 Código civil; Italy: Art 635 Codice civile). Mere substantive dependence, however, is not forbidden in France and Belgium, as only testation in the same document is explicitly forbidden (France: Art 968 Code civil; Belgium: Arts 968, 1097 Code civil). Simple reciprocal dispositions (testamentum reciprocum) are allowed as long as they are not made jointly, but in separate documents. The conversion of an invalid joint will into a valid ordinary will is largely forbidden, as such conversion would effectively achieve the forbidden purpose, namely that the testator is bound (Italy, Belgium, France, Greece; otherwise in Switzerland and Poland).
Even the Germanic legal systems, which, traditionally, are much more open towards binding dispositions in the form of contracts of inheritance, have only recognized joint wills hesitantly, and then only in part. The fathers of the First Draft of the BGB still criticized joint wills for occupying an ‘unclear middle ground between a contract of inheritance and a will’ (Motive zum BGB, vol V, p 253). However, following the example set by the Austrian ABGB (§ 1248 ABGB), the Second Commission (Bürgerliches Gesetzbuch (BGB)) allowed joint wills for spouses (§ 2265 BGB). In contrast, the Federal Supreme Court of Switzerland rejected the recognition of joint wills, which were not expressly regulated under Swiss law but were not expressly forbidden either. It was argued that a will is a unilateral legal act and can, therefore, only express an individual last will. It has to be the work of a single person and cannot have several authors. However, unlike in most other legal systems, conversion into a valid ordinary will is considered to be possible under Swiss law.
There are no misgivings concerning joint wills in the Nordic countries (Sweden: 10:7 ÄB; Finland: 10:7 Perintökaari; Norway: § 49 Lov om arv; Denmark: § 47 Arvelov). English law also permits joint testamentary dispositions. Several persons can thus make a will in one deed (joint will). However, its effects are no different from the effects of two isolated wills. If, on the other hand, two people jointly—whether in a single deed or in separate documents—determine how their estates are to be dealt with after their deaths, they can make an agreement to be bound by this arrangement (agreement not to revoke the mutual will). Such agreements can be made by anyone, although normally only spouses make use of them.
Legal systems which permit joint wills usually do not establish any formality requirements. The same provisions normally apply that apply to ordinary wills. German law is an exception in this respect as a joint holographic will can also be made by only one of the testators; the document then has to be signed, in his own hand, by the other (§ 2267 BGB).
Apart from that, joint wills have been subject to a wide variety of rules in the various legal systems. In Austria (§ 1248 ABGB), only spouses are allowed to make a joint will, while in Germany same-sex life partners are also allowed to do so (§ 2265 BGB read together with § 10(4) LPartG). Comparable restrictions are alien to other legal systems. The legal effects are also not uniform. Where a testamentum correspectivum is revoked by one party, most legal systems also declare the dispositions of the other party to have fallen away (Germany: § 2271(1) BGB; Austria: § 1248 ABGB; Finland: 10:7 Perintökaari; Sweden: 10:7 ÄB). Moreover, under some legal systems, the right of revocation expires with the death of one of the testators (Germany: § 2271(2)1 BGB; Norway: § 57 Ärvdabalk), while the one testator can still freely revoke his will even after the death of the other under Austrian (§ 1248 ABGB), Finnish (10:7 ÄB) and Swedish law (10:7 ÄB).
Neither a joint will nor a mutual will restricts the freedom of testation of the parties concerned under English law. An agreement not to revoke a mutual will, however, has a certain binding force after the death of the first person. Up until that point in time, a mutual will can be revoked by mutual agreement or by unilateral declaration, of which the other party must have notice. However, after the death of the first testator, the survivor becomes a trustee of the estate affected by the mutual will (constructive trust). The surviving testator is thus not inhibited from making a different disposition mortis causa which is contrary to the mutual will. But this does not change the fact that, after his own death, the estate continues to be subject to the trust which has to be respected by the personal representative (liability of heirs) who has to execute the estate. It is up to the parties to agree in detail how far the binding force should extend. Dispositions inter vivos are normally permitted and will only breach the constructive trust if they are designed adversely to affect the trust’s beneficiary.
All things considered, European legal systems continue to judge the permissibility of binding dispositions mortis causa very differently. The very fact that in those legal systems that allow binding dispositions mortis causa lawyers often warn of the dangers associated with such dispositions shows how difficult it is to determine which of the various solutions is preferable. At the same time, it seems unimaginable that those legal systems will one day abandon the idea of allowing testators to bind themselves; for – in spite of all the problems associated with it – they thereby enhance party autonomy in that they permit testators to dispose over their property in existence at the time of death, with binding effect, already during their lifetime.
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