Donations: can they be challenged?

It is not uncommon to wish to benefit a child or a loved one through a lifetime gift.

Article 762 of the Civil Code defines a gift inter vivos as follows:
“A gift inter vivos is an act by which the donor presently and irrevocably disposes of the given property, in favour of the donee who accepts it.”

According to Article 820 of the Civil Code: “A gift inter vivos may only be revoked for failure to fulfil the conditions under which it was made, for ingratitude, or due to the subsequent birth of children.”

However, gifts made between spouses during marriage, are always revocable (Article 951 of the Civil Code).

In matters of inheritance, gifts made during the lifetime of the deceased for the benefit of a person are to be brought back into the estate unless otherwise stipulated. They may also be subject to reduction if necessary.

Bringing gifts back into the estate and reduction are two distinct mechanisms aimed at ensuring equality among heirs and respect for the reserved portion of the estate.

Upon the opening of an estate, gifts made to heirs are brought back into the estate to determine each heir’s share.

This mechanism thus makes it possible to restore equality among heirs by taking into account the gifts received by some of them. The objective is to reconstitute the estate by including the gifts made during the deceased’s lifetime, and then proceed with the distribution of assets.

For example:

Mr. A, a Monegasque national, dies in Monaco leaving two children.

As reserved heirs, each of them is entitled to one third of their father’s estate.

During his lifetime, Mr. A gave his daughter a gift valued at 100,000 euros. At the time of his death, the estate is valued at 250,000 euros.

Mr. A’s daughter must return the gift she received (fictitiously, in value) into the estate. The estate will then be valued at 350,000 euros, and the assets will be distributed based on this amount.

Reduction, on the other hand, allows for the reduction of gifts (donations or legacies) that exceed the available portion and infringe upon the reserved portion. Reduction must be requested by the reserved heirs.

Understanding these concepts is essential for sound estate planning.