March 03, 2025
A lifetime support contract is a contract by which one party (the maintenance provider) undertakes to maintain the other party (the maintenance recipient) until his or her death. In return, the maintenance recipient transfers all or part of his assets to the maintenance provider, with the acquisition of the property being deferred until the death of the maintenance recipient. This contract is regulated by the Civil Obligations Act.
Subject-matter, parties and form of the contract
The subject of the contract is the maintenance of the maintenance recipient until his death and the transfer of property to the maintenance provider. The parties to the contract are the provider and the recipient of maintenance. The contract must be concluded in writing and certified by a judge, certified (solemnized) by a notary public or drawn up in the form of a notarial deed. The subject of the contract may be all or part of the recipient’s assets, including real estate and movable property.
Restrictions and registration in registers
A maintenance provider may have a maximum of three lifetime maintenance contracts at the same time, and a contract concluded contrary to this limitation is null and void. The contract is entered in the Register of Lifelong and Lifelong Maintenance Contracts, which is kept by the Croatian Chamber of Notaries. If the subject of the contract is real estate, the record of the contract is entered in the land register.
Before certifying or drawing up a contract, the judge or notary public will check in the Register of Lifelong and Lifelong Maintenance Contracts the number of maintenance recipients with whom the maintenance provider has concluded lifelong maintenance contracts and/or lifelong maintenance contracts.
Contract Award Procedure
When certifying or drafting the contract, the judge or notary public will read the contract to the contractors and warn them in detail and in words understandable to the contractors of the rights and obligations arising from the contract. The authorised person will check by direct questions whether both parties to the contract have understood the rights and obligations arising for them from the contract.
Liability and legal consequences
The maintenance provider is not liable for the debts of the maintenance recipient, unless otherwise agreed. In the event of the death of the maintenance provider, his rights and obligations under the contract pass to his heirs, if they agree. Consent to the assumption of rights and obligations under the contract is given in writing, certified by a judge of the competent court or confirmed (solemnized) by a notary public or drawn up in the form of a notarial deed.
If they do not agree to the extension of the lifetime maintenance contract, the contract is terminated, and they are not entitled to claim compensation for the previously given maintenance, unless they are unable to assume the contractual obligations. In this case, the court determines this compensation at its own discretion, taking into account the financial circumstances of the maintenance recipient and the persons who were entitled to extend the lifetime maintenance contract.
The contract is fulfilled upon the death of the maintenance recipient, when the provider acquires the property that is the subject of the lifelong maintenance contract.
Termination of the contract
The contract may be terminated by mutual termination, by the death of the maintenance provider, by termination due to non-fulfilment of the obligations assumed by the contract or by a court decision if the relations between the parties are so disrupted that cohabitation becomes unbearable. After the termination of the contract, each party returns what it received from the other party under the contract, unless the contracting parties agree otherwise.
Tax aspects of a lifetime maintenance contract
The conclusion of a lifetime maintenance contract may be subject to taxation. Namely, in the case of a lifetime maintenance contract, the moment of transfer of property is the death of the maintenance recipient, and if the recipient is not the heir of the first order of the maintenance provider, the maintenance recipient is not exempt from real estate transfer tax. This is regulated by the Real Estate Transfer Tax Act.
If there is an obligation to pay real estate transfer tax for the maintenance provider, it is reduced by 5% for each year of maintenance duration elapsed from the date of conclusion of the lifelong maintenance contract until the death of the creditor.
A lifetime maintenance contract is a complex legal institute that requires careful consideration of all aspects before concluding it. Professional legal aid is often necessary for the proper drafting and implementation of contracts.
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