In a private property system, anyone can freely dispose of property, but gratuitous dispositions, such as donations, can be reversed by the heirs after the decedent’s death by exercising the right to a share. A reversion is the minimum share of an inheritance that heirs are legally guaranteed and is calculated based on the value of the property at the time of the inheritance. Depending on the form of property, the return can be in the form of money or the property itself, and if the market value fluctuates, it is based on the market value at the time of inheritance.
Under a private property system, anyone can freely dispose of their property. This is one of the fundamental rights of property owners, and they can dispose of their property in a variety of ways, such as selling it or donating it. However, when an act of gratuitous disposition occurs, such as a donation, in which property is given away without consideration, the result can be reversed regardless of the wishes of the donor and the donee. This is to ensure that the rights and interests of heirs are legally protected.
When the gratuitous disposer dies, inheritance begins, and his heirs can exercise the right of reversion, which is the right to return the freehold. At this point, the gratuitous disposer becomes a legatee, and his rights and obligations are transferred to his heirs. By exercising the rights guaranteed by law, the heirs are able to protect their share of the inheritance, and this right of residuary interest is an important legal device to protect the legitimate expectations of the heirs.
A vested interest is the legally guaranteed portion of the benefit that the heirs would have inherited in the absence of the decedent’s gratuitous disposition. For example, if the heirs are only one of the decedent’s children, they are only guaranteed 1/2 of the benefit they would have inherited. The benefit that the heirs could have inherited is calculated by adding the value of the property that the decedent had at the start of the inheritance to the value of the property that has already passed to gratuitous acquirers. This is necessary to ensure a fair distribution of the inheritance.
An heir with an inherited interest in property that the decedent had at the time of the inheritance can only receive a portion of the inherited interest back. This is because they can only get back the value of the deficiency, which is the value of the interest minus the interest already inherited. The value of the deficiency is calculated as a monetary amount, but it is not always returned as money. If the property disposed of for free is not money, but property other than money, such as goods or stocks, the property itself is subject to return. However, if it is not possible to return the property itself, the gratuitous acquirer must return it in money. Also, even if it is possible to return the property itself, it may be returned in money by agreement between the right holder and the gratuitous acquirer.
If the gratuitously disposed of property is an object, what is the form of return of the freehold? If the amount of the freehold deficiency owed by the gratuitous acquirer is less than the value of the gratuitously disposed of object, the freehold holder is entitled to receive from the gratuitous acquirer the proportion of the freehold deficiency that is equal to the value of the object. This divides the ownership of the property among several people, each of whom has a share, called an equity interest. The division of shares sometimes involves complex legal procedures, which can lead to disputes between heirs.
If the market value of a gratuitously disposed of item fluctuates, which market value should be used to calculate the deficiency? For the purposes of the marital deduction, the market value at the inception of the inheritance should be used. This is to reflect the fair value at the inception of the inheritance. However, if the increase in the value of the item is due to the gratuitous acquirer’s efforts, the calculation should be based on the market value at the time of the gratuitous acquisition. When calculating the share that is subject to return based on this deficiency, the value should be based on the market value at the time of inheritance, regardless of the cause of the increase. This is a balanced approach that protects the rights of the heirs while recognizing the efforts of the gratuitous acquirer.
