This blog post examines how the gratuitous dispositions of the decedent and the statutory inheritance rights of heirs play a role in the fair distribution of inherited property.
Under the private property system, anyone can freely dispose of their property. While there are various methods of disposing of property, gratuitous dispositions like donations require special attention. This is because, while such gratuitous dispositions can be freely made while the owner is alive, the situation changes upon the owner’s death. Upon the commencement of inheritance, heirs can assert their legally guaranteed rights, potentially leading to the reversal of gratuitous dispositions.
When the gratuitous disposer dies, inheritance commences, and their heirs can exercise the right to claim their statutory share. This statutory share right ensures heirs receive a minimum guaranteed portion of the estate. This allows heirs to preserve their inheritance if it was diminished by gratuitous dispositions made by the decedent. In this case, the gratuitous disposer becomes the decedent, and their rights and obligations are transferred to the heirs.
The statutory share is the legally guaranteed portion of the benefit heirs would have received had the decedent not made gratuitous dispositions. If the decedent has only one child as an heir, only 1/2 of the benefit they could have received is guaranteed. The benefit the heirs could have received is calculated by adding the value of the property the decedent possessed at the time of inheritance commencement to the value of the property already transferred to the gratuitous recipient. This is because the reserved portion exists to protect the benefit the heirs expected to receive.
The purpose of exercising the right to a statutory share during the inheritance process is to maximize the assets heirs can receive following the decedent’s death. If the decedent gratuitously disposed of significant assets during their lifetime, the heirs’ share of the inheritance is reduced accordingly. In such situations, heirs can exercise their right to a statutory share to recover a portion of the assets gratuitously disposed of.
An heir who has already received benefits from the property the decedent held at the time of inheritance commencement can only recover a portion of the benefits corresponding to the reserved share. This is because they can only recover the shortfall amount of the reserved share, which is the difference between the benefits corresponding to the reserved share and the benefits already received. While the value of the shortfall amount is calculated in monetary terms, it is not always returned in cash. If the gratuitously disposed property is not money but property other than money, such as goods or stocks, the disposed property itself is, in principle, subject to return. However, if returning the property itself is impossible, the gratuitous transferee must return the equivalent value in money. Furthermore, even if returning the property itself is possible, it may be returned in money by agreement between the statutory share beneficiary and the gratuitous transferee.
If the gratuitously transferred property is an object, how is the statutory share returned? If the amount of the statutory share deficiency that the gratuitous transferee must return is less than the value of the gratuitously transferred object, the statutory share beneficiary can receive from the gratuitous transferee an amount proportional to the statutory share deficiency out of the amount equivalent to the value of that object. This results in ownership of a single item being divided among multiple persons, with each person’s share being called a share. In the process of dividing shares, a fair distribution must be made to maximize the protection of each heir’s rights.
If the market value of an item disposed of gratuitously fluctuates, what market value should be used as the basis for calculating the shortfall in the reserved portion? In light of the purpose of the reserved portion, the market value at the time of inheritance commencement should be used. However, if the increase in the item’s market value resulted from the gratuitous acquirer’s efforts, the market value at the time of gratuitous acquisition should be used for calculation. When calculating the share subject to return based on this determined shortfall in the reserved portion, the fair market value at the time of inheritance commencement must be used, regardless of the cause of the value increase.
Therefore, while the freedom to dispose of property is guaranteed under the private property system, such disposal is not always entirely free when considering inheritance and reserved portion issues. Understanding the legal procedures related to property disposition and the rights of heirs is crucial. The right to a statutory share serves as a mechanism to protect the legitimate rights of heirs. It minimizes property loss resulting from gratuitous dispositions by the decedent and preserves the expected benefits of the heirs. Consequently, heirs can assert their rights to the property even after the decedent’s death.
