Usufruct, Inheritance and the Compulsory Portion: How the Reservation Shapes the Estate

The Interface: Why the Usufruct Touches the Law on the Compulsory Portion

The compulsory portion (Pflichtteil) secures close relatives – children, spouses and, in certain cases, parents – a minimum share in the estate, even where they have been disinherited. It amounts to half of the statutory share of inheritance and is a pure monetary claim against the heirs.

Anyone who gives away their assets during their lifetime could hollow out the estate and thereby let the compulsory portion run empty. It is precisely this that the compulsory-portion supplement claim (Pflichtteilsergänzungsanspruch) under § 2325 BGB prevents: gifted items are added back to the estate in terms of value, so that the compulsory portion increases.

The usufruct sits at a sensitive point in this system. If the donor reserves the right to continue using the property and to draw its income, they have economically hardly relinquished it. This has two consequences that we explore in this guide: the ten-year tapering period often does not run, and the encumbrance reduces the value of the property. Anyone wishing to read up on the basics of gifting, transfer or usufruct will find the fundamentals in our separate guides – here the focus is on their interplay in the inheritance case.

Compulsory-Portion Supplement under § 2325 BGB and the Tapering

If the testator has made a gift to a third party, the person entitled to a compulsory portion may, under § 2325 (1) BGB, demand by way of supplement the amount by which their compulsory portion increases when the gifted item is added to the estate. The gift is thus fictitiously brought back.

So that old gifts do not have an effect forever, § 2325 (3) BGB orders a staggering over time, the so-called tapering or pro-rata-temporis model:

• In the first year before the inheritance case, the gift counts in full.
• For each further year, the attributable value falls by one tenth: after two years therefore 9/10, after five years 5/10.
• Once ten years have passed since performance of the gifted item, the gift is left entirely out of account.

Anyone who transfers early and definitively can therefore effectively reduce the compulsory portion. Decisive is the word performance in § 2325 (3) BGB: the period only begins once the item has actually been removed from the donor's assets. A mere re-registration in the land register is not necessarily sufficient for this – and this is where the usufruct comes in.

The Sticking Point: With a Reserved Usufruct the Period Often Does Not Run

If the donor reserves a comprehensive reserved usufruct (Vorbehaltsnießbrauch) upon transfer, the ten-year period, according to settled case law, as a rule does not begin to run. The reason: anyone who continues to live in the property or keeps its rental income is precisely not giving up the economic enjoyment. There is a lack of performance within the meaning of § 2325 (3) BGB.

Fundamental here is the judgment of the Federal Court of Justice (BGH) of 27 April 1994 (ref. IV ZR 132/93). According to it, performance only exists if the testator not only definitively gives up their position as owner but also waives continuing to use the item to a substantial extent. With an unrestricted reserved usufruct, the donor does not forgo the enjoyment – the period is suspended. Experts call this the enjoyment-waiver case law (Genussverzicht-Rechtsprechung).

The practical scope is considerable: a property gifted 20 years ago under full usufruct may still flow fully into the compulsory-portion supplement in the inheritance case – as if it had never been gifted. The supposed time gain evaporates. Persons entitled to a compulsory portion should therefore have old gifts examined closely; the first point of reference is often one's own lawyer or notary.

When the Period Does Run Despite Usufruct or Right of Residence

The enjoyment-waiver case law is not automatic. What matters is whether an independent economic use remains with the recipient. Several constellations cause the period to run despite reserved rights:

• Reserved right of residence instead of usufruct: By judgment of 29 June 2016 (ref. IV ZR 474/15), the BGH ruled that a mere right of residence regularly does not hinder performance. The period then begins to run on completion of the gift.
• Right of use to one part only: If the reservation is limited, for instance, to one of several flats while the recipient can let the remaining units, an economically significant use remains with them – the period typically runs.
• Proportional usufruct (Quotennießbrauch): If the donor reserves only a fraction of the income, the running of the period can begin to the extent that the recipient receives the remaining enjoyment.

What is decisive is never the designation of the right but the economic view: if the donor retains the enjoyment at its core, the period is suspended; if something substantial remains with the recipient, it runs. This distinction is demanding in the individual case and depends on the specific arrangement.

For gifts to the spouse, a separate rule also applies: under § 2325 (3) sentence 3 BGB the period does not begin before dissolution of the marriage – irrespective of the usufruct.

Valuing the Usufruct: § 14 BewG, Capital Value and Annual Value

Whether for the compulsory portion, for gift tax or for the value of the encumbered property – the usufruct must always be quantified in euros. The benchmark is the capital value: the multiple of the annual value.

• The annual value is the annual usage advantage, i.e. the actual annual net rent in the case of letting or the rent saved in the case of own use.
• The multiplier is determined under § 14 BewG. It is derived from the mortality table of the Federal Statistical Office and depends on the age and sex of the entitled person: the younger the usufructuary, the higher the multiplier and thus the capital value.
• The annual value is capped at the top. For real property it may, for tax purposes, amount to at most the value of the property divided by 18.6.

Example to give an idea of the magnitude: if a flat brings in 12,000 euros annual net rent and a multiplier of around 12 results for the entitled person, the capital value of the usufruct is around 144,000 euros. For the compulsory portion the lowest-value principle of § 2325 (2) BGB additionally applies: the value at the time of the gift and at the inheritance case are compared; the lower one counts. Which value is decisive also determines whether the usufruct encumbrance is deducted at all. These calculations are complex – the basis for any sound quantification is a realistic market value of the property.

The Usufruct in the Inheritance Case: Extinction, Merger and Legacy

If the usufruct beneficiary dies, their lifelong usufruct extinguishes under § 1061 BGB. It is strictly personal and not inheritable. The owner then holds the property unencumbered – in the donor's inheritance case the encumbrance falls away, and the full value can become relevant to the compulsory portion.

If, by contrast, the encumbered owner dies first – for example the gifted child who dies before the usufruct-entitled parent – the usufruct continues. The child's estate then contains an encumbered property: for the compulsory portion, the market value less the capitalised usufruct counts.

A special feature is the merger (consolidation): if the usufructuary becomes full owner at the same time – for example as sole heir of the property – usufruct and ownership come together in one person, and the usufruct extinguishes.

Finally, a usufruct can also be conferred by will as a legacy, frequently in favour of the surviving spouse over the family home. Such a usufruct legacy reduces the value of the ownership for the inheriting children. If a child entitled to a compulsory portion is itself provided with only a usufruct legacy, it may disclaim this under § 2307 BGB and instead demand its compulsory portion in money.

Arrangement, Typical Conflicts and the Value of a Sound Valuation

Recurring points of dispute arise from the interplay of usufruct and compulsory portion. Anyone who knows them can counteract early:

• Passed-over siblings: if one child is provided with the property while others come away empty-handed, the compulsory-portion supplement claim looms – with a full usufruct, without the protective ten-year period.
• If the estate is insufficient, the recipient is liable on a subsidiary basis under § 2329 BGB: they must tolerate satisfaction out of the gift or pay the shortfall in money.
• Dispute over the value: persons entitled to a compulsory portion set the property value high, heirs set it low. Quantifying the usufruct under § 14 BewG additionally sharpens the conflict.

Approaches to structuring such as compulsory-portion waivers, balanced provisions to all entitled persons or the deliberate choice between usufruct and right of residence belong in the hands of a notary and a specialist lawyer. We do not pre-empt this – but each of these decisions stands or falls with a robust property value.

This is precisely where the contribution of Richter Immobilien-Transaktionen lies: a neutral, sound valuation of your property as a factual basis for compulsory-portion calculation, gift or settlement. Grown over decades, we have a network of more than 20,000 contacts and know the market in Düsseldorf and NRW. We do not give guarantees of a particular result – but we do give a reliable assessment on which families can orient themselves.