Lifetime support agreement: How to legally ensure old age and protect assets?
A contract on lifetime support is one of the most common, yet at the same time legally most sensitive contracts in our legal system. Behind the noble intention to provide an elderly person with a dignified old age, there are often complex legal relationships which, if not precisely defined, may lead to long and exhausting court disputes lasting for years.
In the following text, learn what is essential to know before signing this contract.
What is a contract on lifetime support?
By this contract, one party (maintenance recipient) undertakes that after their death, the other party (maintenance provider) transfers ownership rights over specifically defined assets or rights. On the other hand, the maintenance provider undertakes to support, care for, and look after the maintenance recipient until the end of their life. The most important specific feature of this contract is that… the property is transferred into the ownership of the provider only AFTER the death of the recipient., and not during their lifetime.
Three key things you must pay attention to:
- Strict form (Role of the public notary)
This contract cannot be written by yourself on a piece of paper. It must be drawn up in written form and solemnized (certified) by a public notary (notary public)The notary is obliged to specifically inform the contracting parties that the property does not transfer into ownership immediately, and that the legal heirs of the maintenance recipient will not be able to inherit that property.
- Risk of invalidation (The contract is not a ‘gift’)
One of the most common grounds for challenging this contract in court by legal heirs is the attempt to disguise a gift contract through it. A contract on lifetime support is a contract for consideration – there must be a real counter-performance in the form of care, purchase of medication, food, or payment of bills. If the maintenance provider has not actually provided anything, the contract may be annulled.
- Element of aleatory nature (a gamble with time)
This contract is characterized by uncertainty (aleatoriness) regarding the duration of the obligation. At the time of concluding the contract, it is not known how long the maintenance recipient will live. If the recipient was seriously ill and died shortly after the contract was concluded, the heirs may seek annulment if they prove that the maintenance provider knew that death was imminent and that the contract was concluded for speculative purposes.
Legal heirs’ rights and the compulsory inheritance share
A common misconception is that the children of the deceased can automatically claim their “compulsory share” from the property covered by this contract. The property included in a contract on lifetime support does not form part of the estate of the deceased. Legal heirs cannot inherit it, nor can they claim a compulsory share from it, unless they successfully prove in court that the contract was fictitious or void.
Lawyer’s advice
Whether you are acting as the maintenance recipient seeking to secure reliable care, or as the maintenance provider assuming significant personal and financial responsibility, it is essential that the contract clearly and in detail define all obligations (location of residence, food, medical care, and covering funeral expenses). General and vague clauses in a contract are the fastest path to litigation.
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