Inheritance Law2026-10-12

Transferring your house in exchange for a life annuity – does the ten-year clawback period for the compulsory portion really start running?

With a reserved usufruct, the reservation suspends the ten-year period under § 2325 BGB – with a life annuity, the position is usually different. What this means for your transfer or your compulsory-portion claim.

You have transferred your house to one of your children in return for a monthly life annuity – or you are a child who has been passed over and are trying to work out whether that transfer still has to be factored into your compulsory portion. Either way, the same question arises: does the ten-year period under § 2325(3) BGB start to run from the day the new owner is registered in the land register – or is it suspended, as it is with a usufruct, for as long as the annuity continues?

In short

Where there is a genuine life annuity provided as consideration, the ten-year period usually runs in the ordinary way from the moment the new owner is registered in the land register. With a reserved usufruct the position is different – it suspends the start of the period. The reason is that, by taking a life annuity instead, the person transferring the property genuinely gives up the owner-like use of the house. All they retain is a payment of money. What matters, though, is the precise drafting of the contract in each individual case. If the annuity is set too low, a gift element remains, and the period for that element has to be calculated separately.

How I can help you

Reviewing your transfer contract: a pure life annuity, a mixed gift, or a concealed usufruct?
Calculating the gift element and the proportion still attributable under § 2325(3) BGB
Pursuing or defending claims to supplement the compulsory portion against the recipient of the gift
Advising on how to structure matters if you are planning a transfer against a life annuity yourself and want to set the ten-year period running in a targeted way

I have explained the basics of supplementing the compulsory portion and of gifts in detail in my article Supplementing the compulsory portion where a gift is made subject to a reserved usufruct: who is entitled to claim and how the year-by-year reduction works. This article deals with the special case of the life annuity.

Why a life annuity is treated differently from a usufruct

Under § 2325(3) BGB, the reduction of the gift begins when the gifted asset is handed over. In the final year before death, the gift is still taken into account in full. After that, the attributable proportion falls by one tenth each year. Once ten full years have passed, the gift is irrelevant for compulsory-portion purposes. In the case of land, “handing over” in this sense is usually the re-registration of the new owner in the land register.

Where the transferor reserves a usufruct, they remain, in economic terms, the user of the house. They live in it or draw the income from it – in civil-law terms they have parted with ownership, but in economic terms they have not parted with the benefit of using the property. That is why the ten-year period remains suspended for as long as the usufruct exists.

With a life annuity the position is fundamentally different. The transferor gives up possession, use and all rights in the house immediately and in full. What they keep is not a right in rem over the transferred asset. It is a contractual claim to recurring payments of money – secured, where appropriate, by a charge (Reallast) registered in the land register. These payments are the consideration for the transfer, not a continuing owner-like use of the house itself. For that reason the asset is usually “handed over” in full, within the meaning of § 2325(3) BGB, upon registration in the land register. The ten-year period runs from that point without being suspended. It is precisely this clear distinction between usufruct and life annuity that is making the life-annuity structure attractive again for transfer contracts. Anyone who genuinely wants to set the period running is more likely to achieve that with a life annuity than with a reserved usufruct.

The flip side: the mixed gift and the comparison of values

The ten-year period only helps to the extent that there is actually a gift at all. A life annuity is consideration. If it is set at an appropriate value, the transaction is for value, and § 2325 BGB does not come into play in the first place. Difficulties arise where the house and the annuity are not of equal economic value. In that case there is a mixed gift: the part of the house’s value that is not covered by the capitalised value of the annuity counts as a gratuitous transfer. That part is subject to supplementation of the compulsory portion. For this gift element, the ten-year period runs separately from the date of registration in the land register.

For the comparison of values, the market value of the transferred house is set against the capitalised value of the annuity payments. The present value of the annuity depends largely on two factors: the statistical life expectancy of the entitled person at the time of transfer, and the interest rate applied. Both are estimated figures – which is why, in practice, this is a central point of dispute. The longer the annuity recipient actually lives after the contract is concluded, the more the economic advantage shifts in their favour. That does not, however, change the valuation as at the time of transfer. It is that valuation which is decisive for supplementing the compulsory portion.

Where the estate is not enough: the claim against the recipient under § 2329 BGB

If the estate does not cover the supplement to the compulsory portion, the entitled person may still, in certain circumstances, have a direct claim of their own against the recipient of the gift under § 2329 BGB. This claim requires that the heir is not themselves sufficiently liable to make up the compulsory portion. It is then a claim for the gift to be handed over, under the rules on unjust enrichment. The recipient can avert that by paying the missing amount. For you, this means: where the estate is insufficient, do not assume too quickly that there is nothing left to be gained. Have it checked whether this route is still open before you treat the claim as dead.

A typical case from practice

A mother transfers her detached house to her son. In return, he pays her a monthly life annuity. The contract describes it as “appropriate” – but in reality it is well below the economic value. Calculated correctly by reference to life expectancy and interest rate, that value ought to have been set higher. Eight years later the mother dies. The daughter has received nothing. She claims a supplement to her compulsory portion. The son resists: this was a fully commercial transaction for value, and in any event the ten-year period has almost run out. In fact, the valuation shows that the annuity covers only around sixty per cent of the house’s value. The remaining forty per cent counts as a gift. For that element, the ten-year period only began to run on registration – and in the eighth year only around twenty per cent of it is still attributable.

Common mistakes

The annuity is set too low when the contract is concluded. No one actually works out the capitalised value – and so, unintentionally, a mixed gift arises.
The transferor and the recipient assume that a life annuity has the same effect as a usufruct for compulsory-portion purposes and suspends the period in the same way. With a genuine life annuity that is usually precisely not the case.
Those entitled to a compulsory portion leave the claim against the recipient under § 2329 BGB unexamined because they focus solely on the heir.
The start of the period is confused with the date of the notarial contract rather than the actual date of registration in the land register.

Frequently asked questions

Does a life annuity suspend the ten-year period in the same way as a usufruct?

No, usually not. With a usufruct, the transferor remains the economic user of the house. With a life annuity, they give up possession and use entirely and receive only a payment of money. That is why, here, the period runs from registration in the land register without being suspended.

What happens if the life annuity was set too low?

Then there is a mixed gift as regards the part of the value not covered. For that element, § 2325 BGB applies with the full reduction rule. This holds regardless of the fact that the rest of the transaction was for value.

From exactly when does the period run in the case of land?

What usually matters is the point at which the new owner is registered in the land register. The date of the notarial transfer contract is not decisive.

Can I rely on the expiry of the period as the recipient of the gift if I am also an heir?

The reduction operates in the recipient’s favour regardless of whether they are also an heir. Once the period for the gift element has expired, the supplement to the compulsory portion falls away to that extent – irrespective of whether the recipient is an heir.

What if the heir cannot pay the supplement?

Then, where the requirements of § 2329 BGB are met, the person entitled to the compulsory portion can proceed directly against the recipient of the gift. They can demand that the gift be handed over. The recipient can avert this by paying the missing amount.

Your next step

Whether a life-annuity structure actually sets the ten-year period running depends on the details. Those details can only be clarified through a careful valuation – the present value of the annuity, the market value, the date of registration in the land register. I will check for you whether the contract is to be treated as pure consideration or as a mixed gift. I will calculate the proportion that is still attributable. I will then pursue your claims or defend you against unjustified demands. You can find out more about the compulsory portion, supplementing it, and estate planning in the inheritance law topic area. For your specific case, the best thing is to arrange an initial consultation directly.

This article provides general information and is no substitute for legal advice in an individual case. Last updated: 2026-10-12.

Christian Czirnich, Rechtsanwalt (attorney at law), Kirchseeon near Munich

Tell me what you transferred and how the annuity is arranged – I will look into it.

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