Testamentary addition to private foundation assets: acceptance despite estate liabilities

The inheritance declaration is an express statement to the court. Before that statement is made, the foundation board must decide within its own authority whether the private foundation should accept the testamentary inheritance. The resolution provides the basis for action by the persons authorised to represent the foundation, but it does not replace the declaration required by law.

The will, inheritance contract or other legal title must first be secured. The file should then contain an overview of assets and liabilities, known legacies, pending proceedings, deadlines and the steps needed to complete the inheritance. The board must be able to see what will be acquired and which obligations may accompany it.

Section 17(1) PSG requires the board to manage and represent the private foundation and to comply with the foundation deed. The inheritance should therefore not be accepted merely because it appears to increase the foundation’s assets. The board must assess whether the acquisition is permitted by the deed and serves the foundation purpose in the specific situation.

Estate liabilities may include the deceased’s debts, legacies, continuing contracts, taxes, litigation risks or administration costs. The file should distinguish fixed amounts, estimates and unresolved risks. A net figure without an understandable calculation is not enough for a responsible decision.

For every material item, the board should state the information on which it relies, the possible amount and whether the item affects the value of the inheritance or its use for the foundation purpose. For real estate, land register records, financing, leases and open maintenance or tax issues may be relevant. For company interests, the articles, financing and continuing obligations should be reviewed.

Unclear estate information requires a response. This may involve further enquiries, a valuation, review of court records or a legal assessment. The board should record how it is dealing with the remaining uncertainty. A risk does not disappear because the minutes do not mention it.

Section 800 ABGB permits an unconditional or a conditional inheritance declaration. A conditional declaration is made subject to the preparation of an inventory. The appropriate form depends on the information available, the composition of the estate and the private foundation’s risk profile.

An unconditional declaration has far-reaching consequences under section 801 ABGB. The heir is personally liable to the deceased’s creditors and legatees even where the estate is insufficient to cover those liabilities. The board must include this consequence expressly in its risk assessment.

With a conditional declaration, an inventory is prepared under section 802 ABGB. The heir is liable to creditors and legatees only to the extent that the estate is sufficient for the relevant claims. This is a statutory liability framework, not a general release from the duty to investigate, cooperate and administer the estate carefully.

The board must connect the expected acquisition with the foundation purpose and the foundation deed. The resolution should explain which assets will enter the foundation, which management steps will be necessary and whether the inheritance is intended as a long-term holding or a temporary asset position.

Section 17(2) PSG requires each board member to perform their duties economically and with the care of a conscientious business manager. The decision should therefore show administration costs, possible financing needs, continuing obligations and the available liquidity buffer. The private foundation must remain able to meet its own creditors and due obligations.

The purpose requirement does not end with the acceptance resolution. Inventory, estate administration, transfer of title and later management decisions must follow the resolution and the actual facts. A later payment to beneficiaries is a separate review. The article on distribution resolutions and payment records addresses that internal payment level.

A testamentary transfer may also be structured as a legacy. In that case, the private foundation receives a specific legacy claim and does not thereby become heir to the entire estate. The legal title and the exact subject of the transfer must therefore be read closely.

Section 647 ABGB applies, among other things, the rules on capacity to inherit and renunciation of an inheritance correspondingly to legacies. That reference does not answer every question in the individual case. The board must establish whether the foundation is accepting a specific performance, a particular asset or the position of heir.

Reviewing a legacy is separate from a later payment to beneficiaries. A legacy concerns the foundation’s claim under the testamentary instrument. A beneficiary payment concerns an internal foundation decision under the deed, the purpose and creditor protection.