Invalidity of a donation of financial instruments and money carried out with no Public Act
The Joint Sections of the Supreme Court has finally stated on the widely discussed topic in Courts regarding whether the transfer of financial instruments or money through a banking operation shall be considered as a direct donation, and therefore be subjected to the solemn form, or as an indirect donation which does not require such form.
In the case:
- before his death the deceased had transferred to a third party not member of his family, through an order to the Bank, the securities deposited in the credit institution;
- The transfer occurred by a normal transfer operation (so called “bancogiro”);
- the successor of the deceased claimed the restitution of such securities on the assumption that the transfer put in place was a direct donation made without the required form of a Public Act and, thus, invalid.
In first and second instance, two different versions of case-law on the matter emerged: indeed, in first instance the Court considered the transfer as a direct donation and, thereof, it declared it invalid; on the contrary, the Court of Appeal followed the settled case-law orientation according to which such transfer constitutes an indirect donation not subject to the solemn form provided by article 809 of the Civil Code and, thus, valid.
The case was brought before the Supreme Court that acted in the Joint Divisions format.
The Supreme Court rejected the approach of the Court of Appeal stating that the bank operation carried out in execution of the donator’s order serves as the execution phase of a negotiation transaction occurring between the donor and the beneficiary.
The Joint Divisions noted that, even though the normal transfer operation (so called “bancogiro”) can be classified in the scheme of the delegation of payment, the Bank is not entitled to refuse the transfer order given by the donor (this is the main difference with the delegation of payment where, pursuant to article 1269 of the Civil Code, the delegate is allowed to refuse the mandate). Therefore, such transfer shall be considered as a direct donation with indirect execution due to the deposit of financial instruments or money to the Bank.
There are many legal consequences arising from this judgment, all having a considerable relevance.
Under a material aspect, the judgment has significant practical impact. It is very common in practice that, during deceased’s life – especially in the asset management relations – liberal transfers of financial instruments or money are carried out. From now on, such donations – in order to be valid – shall have the form of a Public Act or shall be made throughout other legal instruments that genuinely constitute indirect donation. Otherwise, in the case that the transfer is realized through the order to the Bank without the solemn form, the donation of the financial instruments or money is invalid.
From a procedural standpoint it can be noted that with the death of the de cuius, the goods transferred without the solemn form (or without an appropriate legal construction) will be part of the estate. Therefore, they can be claimed by the heirs against the beneficiaries without the need of undertaking the action aimed at reduce the donation (which is reserved for legitimates only and just only in case of an injury of their quota), but simply undertaking a claim for restitution (an action that can be carried out by any heir and is always available).
Lastly, from a tax standpoint, the relevance of the abovementioned judgment lays on the fact that direct donations, unlike indirect donations, are taxed. Furthermore, in case of a claim for restitution, the financial instruments and money object of the claim will be part of the estate, even for the inheritance tax purposes.
The contents of this article is intended for informative purposes only and cannot be considered as professional advice.