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140 T. Antenreiter, National Report Austria Notarius International 3-4/2002 is to one third of the statutory portion of the deceased’s estate 62 . The compulsory portion is only, however, a pecuniary claim, so that the person entitled to a compulsory portion (also known as a forced heir) cannot assert a claim to particular objects in the estate. Furthermore, a child’s compulsory portion can be reduced by half once again if a parent and the child entitled to a compulsory portion at no time had a close relationship, as usually exists between parents and children. As a rule this provision refers to children born out of wedlock who had no contact whatsoever with their natural father, but in such cases the compulsory portion cannot be reduced if the parent refused personal contact with the child for no reason 63 . In order to prevent the deceased giving away all his assets during his lifetime and thereby restricting the rights of the forced heirs, Austrian law provides that gifts inter vivos can, under certain conditions, also be brought in as a basis of assessment for calculating the compulsory portions of the children and the surviving spouse, but not, however, the parents (adding back of advancements ) 64 . If there are insufficient funds in the estate available to cover the compulsory portions thus calculated, the donees may even be obliged to give back the gifted item in favour of the forced heirs or make compensation payments (setting aside a gift) 65 . 5.5 Substitute succession, legacies and testamentary obligations Under Austrian law it is possible to appoint firstly one person as prior heir and at the same time stipulate that another person shall receive the inheritance as substitute heir on the occurrence of a particular event, usually in the event of the death of the prior heir (fideicommissary substitution) 66 . In such cases, for the protection of the substitute heir, it is mandatory for an inventory of the estate to be drawn up. As such dispositions considerably restrict the extent to which the items affected may be passed on, fideicommissary substitution can only be directed in respect of contemporaries or in favour of a maximum of two further generations 67 . The prior heir is in the position of a usufructary 68 and is thus not permitted to diminish the intrinsic value of the inheritance and can only dispose of the items affected with the consent of the substitute heir. Even in the case of an unequivocal testamentary direction by a testator the prior heir and the substitute can set aside the fideicommissary substitution by mutual agreement. The rules relating to fideicommissary substitution apply correspondingly in the case of substitute legatees and in the case where there are directions imposing time limits, conditions and obligations to be performed (socalled constructive substitute succession) 69 . Austrian law distinguishes between the heir, who acquires his legal status as universal successor of the deceased, and the recipient of a legacy (also called a legatee), who merely receives a certain item bequeathed by the deceased and becomes individual successor only in relation to this item. Accordingly the legatee only has a claim under the law of obligations against the heir for transfer of ownership of the bequeathed object (civil law legacy – Damnationslegat), which in terms of value, however, can make up the greater part or even the whole of the estate 70 . In the case where testamentary obligations are imposed, compliance with them is not checked by the probate court, apart from a few exceptions in the case of testamentary obligations in the public interest 71 . A person entitled to performance of a testamentary obligation (for example, an executor, but not the beneficiary in respect of performance of the testamentary obligation himself), can insist upon fulfilment of the testamentary obligation, if need be enforcing it by recourse to law. Nonfulfilment of a testamentary obligation operates in principle as a resolutive condition 72 , but in the case of testamentary obligations approximate fulfilment is sufficient for the purposes of the deceased’s testamentary wishes; in the case of non-fulfilment where there is absence of fault, the testamentary obligation expires in any event 73 . 5.6. Execution of a will The legal institution, the executor, does not have any great significance in Austrian legal practice. Only one paragraph in the General Civil Code is devoted to this topic, which leaves a lot of questions on this matter still open 74 . According to Austrian case law, the testamentary appointment of an executor by the deceased in principle does not represent a binding direction to the heir. Thus the heir can dismiss the person of the executor, except if the deceased declared his last wishes expressly by means of a testamentary obligation in such a way that the heir has to tolerate the executor or lose the bequest. The rights of the executor under Austrian law include supervising and carrying out the fulfilment of the deceased’s testamentary wishes and participation in the drawing up of the inventory of the estate. Should the case arise the executor is the person entitled to performance of a testamentary obligation. In principle, however, he has no direct representative competence either for the estate or for its heirs, except if he is entrusted by the probate court with attending to certain specific matters, such as an estate guardian or curator. 5.7. Probate proceedings Estate administration is carried out in Austria by the local courts (Bezirksgericht), in non-contentious proceedings, with significant involvement by the notaries 62 Arts. 765 and 766 ABGB (General Civil Code) 63 Art. 773a ABGB (General Civil Code) 64 Art. 785 ABGB (General Civil Code) 65 Arts. 951 and 952 ABGB (General Civil Code) 66 Art. 608 ABGB (General Civil Code) 67 Details in Arts. 611 and 612 ABGB (General Civil Code) 68 Art. 613 ABGB (General Civil Code) 69 Arts. 707 to 709 ABGB (General Civil Code) 70 Art. 690 ABGB (General Civil Code) 71 Art. 161a General Rules on Civil Procedure in Non-contentious Matters 72 Art. 709 ABGB (General Civil Code) 73 Art. 710 ABGB (General Civil Code) 74 Art. 816 ABGB (General Civil Code)
Notarius International 3-4/2002 T. Antenreiter, National Report Austria 141 public who deal with numerous tasks as representative of the court (Court Commissioners). The deaths which occur within the territorial jurisdiction of a local court are allocated to the notaries in the place where the court is, in accordance with a system of allocation set out in advance for a whole year. Alongside dealing with practical matters of administration (in particular looking for heirs, investigating the financial circumstances, possible property inspections and safeguarding the estate etc) the competent Court Commissioner then invites the heirs, relatives or other persons who were close to the deceased to the drawing up the record of the death (Todfallaufnahme), which serves as the basis for the probate proceedings. The notary further undertakes the official announcement of any testamentary instructions and draws up, if stipulated, the inventory of the estate after prior valuation of the estate by court-sworn experts. In practice most court orders are largely prepared by the notaries. The court is thus in the position to accept the notary’s proposals after detailed checking of the content. The probate proceedings are completed by the final order of the court and the issue of the (non-appealable) final transfer certificate (rechtskräftige Einantwortungsurkunde) 75 . The Einantwortungsurkunde is basically a court certificate stating who are the heirs and which is their respective quota of the estate, whether they have accepted the inheritance with unlimited or limited liability and whether there is a fideicommissary substitution or a similar encumberment of the heirs’ position. When the cour’s certificate has become final and non-appealable, the heirs become universal successors in title of the deceased (including the real estate even though they have not yet been registered in the land register). At the same time, they are liable for the deceased’s debts; their liability is limited to the amount of the estate, if the heirs have declared so in their declaration of acceptance of the inheritance (bedingte Erbserklärung). 6. Company law The term “trader” (Kaufmann): in the Austrian Commercial Code (Handelgesetzbuch: HGB) the term “Unternehmen” (business/business undertaking) does not appear; the terms “trader” and “company” (Firma) are most frequently used. The designation “Kaufmann” is, however, not a standard legal term. It is used in the first place to distinguish on the basis of the size of the business undertaking between a small trader (Minderkaufmann), whose business does not require to be organised commercially, and a merchant, who has been registered as such in the Companies Register. Secondly, a “kaufmännisches Unternehmen” (business undertaking) comes into existence either on the basis of registration in the Companies Register or on the basis of the commercial activity which the undertaking pursues 76 . Company (Firma): the term “company” under Austrian law means the name under which the business undertaking appears in public and in its legal relations, and under which, as a rule, it is registered in the Companies Register 77 . Companies Register (Firmenbuch): the majority of Austrian businesses are registered in the “Companies Register of the Republic of Austria”. This is a public register operated electronically by the Commercial Court, which anyone may look at and find out key information relating to a specific business, in particular about the company, the participating members (depending on the type of company), the amount of share capital, the registered office of the business and the persons authorised to represent the business and the nature of their power of representation 78 . A company search may be carried out at any time on the Internet on payment of a fee. All notaries are statutorily obliged to provide the technical requirements in their offices to enable anyone to look at the Companies Register, and for this reason in practice there is comprehensive availability of this service through Austrian notaries 79 . 6.1. Sole traders In its simplest form of a sole trader (Einzelunternehmen) a business is operated by an individual who brings chiefly his personal capacity for work and productivity into the business. This individual represents the business in its external relations and is the holder of the rights and duties affecting the business. In particular this person has unlimited liability to the full extent of his assets. A sole trader business attains merchant status when it operates a commercial enterprise of a certain size (commercial enterprise by virtue of the objects of a business) or is entered in the Companies Register (commercial enterprise by virtue of Companies Register entry). As a rule the company contains the personal name of the sole trader 80 . The setting up of a sole trader business is extremely simple and requires no particular legal form; accordingly there is no mandatory notarial involvement. The main statutory authority is the currently valid version of the Austrian Commercial Code. 6.2. Civil law partnerships and personal companies 6.2.1. Civil law partnership A civil law partnership (Gesellschaft des Bürgerlichen Rechts: GesBR) is formed by means of an agreement between at least two partners in order to pursue jointly a particular business objective, in particular a self-employed or small trader activity. Consequently a civil law partnership cannot be entered in the Companies Register. The civil law partnership does not have legal personality and is not capable of being a party in a lawsuit. In its legal relations it is thus the individual partners who act exclusively and who appear as jointly entitled parties or jointly obligated parties. It is possible for the civil law partnership to have a business designation but not to operate a company. 75 Art. 819 ABGB (General Civil Code) 76 Arts 1 to 7 Commercial COde 77 Arts. 17ff. ABGB (General Civil Code) 78 Art. 8 ABGB (General Civil Code); Companies Register Law 1991 (Firmenbuchgesetz: FBG) 79 Art. 35 Companies Register Law 80 Arts. 17 and 18 ABGB (General Civil Code)
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