Deed of Donation, Last Will and Testament

One form of legal instrument to effect the transfer of property from one person to another that you might intend to minimize, if not outright evade, is the Inter-Vivos Deed of Gift. It is commonly applied as an immediate form of property transfer whereby the owner simply hands over his property to any legal person, in many cases a son or daughter or any close relative, affiliate or business partner, without any kind of monetary consideration, for therefore not subject to any form of sales or income tax.

Although, in principle, a deed of gift has a similar effect to a testamentary will, that is, granting pro bono any legitimate property to any person, the basic distinction is in the moment of the instruments. The last will and testament of a property owner takes effect and becomes enforceable only on the death of the testator. A deed of gift, on the other hand, can be made to take effect immediately, or at whatever time period the donor deems relevant.

The property transfer tax payable to the government in a gift deed is minimal compared to what might be assessed in a last will and testament, which could include, in addition to the basic transfer tax, inheritance tax and any unliquidated liabilities of the testator who must finally be charged against his estate.

While both instruments could be executed unilaterally, a deed of gift could become legally more irreversible and could no longer be rescinded when the donee’s consent and acceptance is made explicit in the contract. When the last will and testament of any person are still subject to revision or modification during the life of the testator, since they become executive only after the death of the testator.

In any case, legal jurisprudence is based on the principle that there is nothing more definitive and enforceable than the last will and settlement instructions of a dying person, thus further strengthening the legal bond that seals the last will and testament.