Gift Agreement or Lifetime Maintenance Agreement: What are the most important differences between these two agreements?

A contract of gift is a contract by which the donor undertakes to transfer or hand over to the recipient a certain object in ownership, to cede a right, to forgive a debt or to assume a debt - all this without compensation. This is the key feature of the gift: it is without compensation, i.e. free.

When you make a gift, you immediately and irrevocably transfer the property to the other person. After the contract is notarized, the donor becomes the owner of that property and can freely dispose of it - sell it, rent it out, give it away, unless you have agreed on special restrictions.

Who can make a gift? Only a person with full business capacity can make a gift. This means that persons under guardianship, minors, or persons under a court order cannot donate. This strict rule exists to protect vulnerable people from possible abuses.

Who can receive a gift? Here the rules are more relaxed because it is theoretically almost impossible to harm a person who receives the property without compensation. Thus, a gift can be received by a person with limited business capacity (for example, a minor), as well as a person with business incapacity (for example, a person under guardianship). In the event that a legally incapacitated person receives a gift, his legal representative should approve the gift.

The contract for the gift of real estate must be concluded in written form and certified by a notary (solemized, as a confirmation of a private document). This is an imperative rule and there is no exception as long as the parties are willing to be informal. An oral contract for the gift of real estate simply does not exist in the legal system - it is void.

For moving objects, the situation is slightly different. The contract for the gift of a movable object concluded in oral form is valid if the object is immediately handed over to the recipient. For example, if you give your daughter your gold necklace and give it to her immediately, the gift is valid even without a written agreement.

However, it is recommended to conclude a written agreement for movable objects of greater value. It provides clear evidence that the object was gifted, which may be important later in inheritance or in possible disputes with other family members.

When notarizing the contract for the gift of real estate, the notary carefully checks the identities of the parties, whether the donor has full business capacity, whether he is aware of the consequences of the donation, and whether the contract was concluded voluntarily without coercion.

A lifetime alimony contract is fundamentally different from a gift contract. This contract is a bilaterally binding contract - which means that both parties have obligations after the conclusion of the contract.

With this contract, the maintenance provider undertakes to support the maintenance recipient or a third person for life, and the maintenance recipient leaves all of his property or a certain part of the property in return. The key difference is that the transfer of property is deferred until the death of the recipient of maintenance.

This means that unlike a gift contract, where the property immediately becomes the property of the recipient, in a life support contract the recipient of the support remains the owner of the property until his death. The maintenance provider acquires the right of ownership of the property and by entering his name in the public books only after the death of the maintenance recipient.

What does 'lifetime maintenance' mean? Maintenance is not defined in detail in the law, but it can be defined in the contract. It mainly refers to the provision of accommodation, food, clothing, health care, nursing and care - everything necessary for a person's normal life. The scope and content of the alimony depend on the contract and the needs of the recipient of the alimony.

A lifetime alimony contract has even stricter formal requirements than a gift contract. It must be concluded in writing and certified by a competent court or by a notary, but with one special feature: in the presence of two witnesses.

During the attestation, the judge or the notary, in the presence of the negotiators and two witnesses who know the negotiators, reads the agreement aloud and warns the negotiators of the consequences of the agreement. This is an added protection for the child support recipient, who is often an elderly person who may not fully understand the legal implications.

Witnesses cannot be any person. They must meet the requirements for witnesses when drawing up a judicial will - which means that they must be able-bodied persons.

The possibility that the maintenance provider can be represented by a proxy is interesting. But even here there are strict rules: the power of attorney must be issued in the form of a public document, it must accurately designate the person with whom the contract will be concluded and the content of the contract, and it is valid only for three months from the day of issuance.

Both contracts can be terminated, but under different conditions and with different consequences.

Termination of the gift contract: The donor may terminate the contract and revoke the gift in case the recipient shows extreme ingratitude by his behavior towards him or a person close to him. This right also passes to the donor's heirs.

What constitutes 'utter ingratitude'? The law does not provide a precise definition, but judicial practice shows that it must be serious behavior: physical violence towards the donor, serious insults, neglect when the donor is sick and in need of help. Simple dissatisfaction or everyday quarrels are not enough for revocation.

The donor who does not have enough means to live, or to support the persons he is obliged to support by law, can terminate the contract and demand the return of the gift. The donor can avoid revocation if he undertakes to provide the donor with adequate funds that he lacks.

Termination of the lifetime maintenance contract: The contracting parties can amicably terminate the lifetime maintenance contract after its execution has begun. If, according to the contract, the contracting parties live together, and their relations are so disturbed that the common life has become unbearable, each party can ask the court to terminate the contract.

Each party may request termination of the contract if the other party does not fulfill its obligations. For example, if the alimony provider does not provide adequate care and support, the recipient may seek termination. Or conversely, if the alimony recipient does not leave the property to him upon his death, the provider may seek termination.

It is important to know that in case of termination of the contract, the party that is not responsible for the termination has the right to demand from the other party compensation for the damage it suffers. This protection is important so that these agreements are not abused.

Both agreements offer certain safeguards, but in different ways.

Contract of gift with encumbrance or mandate: The donor may retain for himself or someone else some right (for example, the right to live in the gifted apartment for life), or he may instruct the donee to do something. If the donee does not perform the burden or order, the donee may terminate the contract and demand the return of the gift.

Right of usufruct: If the donor wants to limit the right of disposal of the gift by the recipient, he can establish the right of usufruct. This means that the recipient of the gift cannot dispose of it and encumber it in any way without the donor's consent. This is a useful protection for the donor who wants to transfer the property but wants to retain control over it.

Registration of the rights of the creditor: In the contract for lifetime maintenance, the provider of the maintenance may request that his right to the real estate from the contract be recorded in a public book. This is an important protection for the grantor - with this notation, third parties will know that such an agreement exists and that upon the death of the grantee, the real estate will belong to the grantor.

Liability for Debts: The maintenance provider is not liable after the maintenance recipient's death for his debts, but may agree that he will be liable for his existing debts to certain creditors. This is an important difference from inheritance, where the heirs are also responsible for the debts of the testator.

This is a critical question that is often asked. In the life support agreement, there are clear rules for this situation.

In the event of the death of the maintenance provider, his obligations pass to his spouse and to his heirs, if they agree. This means that the obligation does not pass automatically - the heirs must declare that they accept it.

If the heirs do not agree to extend the lifetime alimony agreement and do not have a valid reason for doing so, the agreement ends and they do not have the right to claim compensation for the previously granted alimony. This is logical - if they don't want to fulfill the obligations, they can't take the benefits.

If the spouse and descendants of the maintenance provider are unable to undertake the contractual obligations (for example, due to poverty, illness or age), they have the right to request compensation from the maintenance recipient for the previously provided maintenance. The court determines this compensation based on a free evaluation, taking into account the financial circumstances of the recipient of maintenance and the persons who were authorized to extend the contract.

This provision ensures fairness - if the provider has cared for the recipient for 10 years and then dies, their heirs should get something back, unless they are unable or unwilling (without justifiable reason) to continue caring.

Gift contract:

• No compensation - the donor gets nothing back
• The property immediately becomes the property of the donee
• The donee can immediately dispose of the property (if there are no restrictions)
• Notarization (for real estate)
• No witnesses required
• Can be revoked for extreme ingratitude or lack of means
• Suitable when you want to make a pure gift without conditions

Lifetime alimony contract:

• With compensation - the alimony provider undertakes to support the recipient
• Property passes into ownership only after the death of the alimony recipient
• The alimony recipient remains the owner until death
• Notary or court certification in the presence of two witnesses
• Mandatory witnesses
• Can to be terminated if the obligations are not fulfilled
• Obligations can pass to the grantor's heirs
• Suitable when you want to provide for yourself in old age in exchange for property

Use a gift agreement when:

• You want to help your child buy an apartment and you want to give them money or real estate without any conditions
• You want to leave a cherished item to a grandchild
• You want to donate property to a charity or a church
• You want to distribute part of your property to your heirs during your lifetime, without expecting anything back

Use a life support agreement when:

• You are an elderly person without sufficient means to live on and want to ensure that someone will take care of you for the rest of your life
• You have real estate, but you do not have enough means for living and medical care, and you want to exchange the property for lifetime care
• You want to stay living in your home, but you want to ensure that someone will take care of you and will inherit the home after your death
• You have no immediate heirs and want to leave your property to people who will take care of you

Choosing between these two contracts is not a simple decision. You should consider your personal circumstances, your relationship with the person to whom you wish to transfer the property, your needs for the future and the financial position of both parties.