Should you leave property to your children in a will or gift it during your lifetime? Find out from experts which option is more beneficial..

Transferring one's lifelong earnings and assets to their children is a major decision for any parent. Often, matters concerning inheritance or wills become topics of family discussion only after the parents have passed away; however, such situations frequently lead to disputes and disagreements among claimants and siblings regarding the property. In this context, a crucial question arises: should property be passed on to children via a will, or gifted during one's lifetime?

According to legal and financial experts, gifting surplus property during one's lifetime can be a prudent choice. It allows parents to clarify their intentions, address their children's concerns, and resolve any potential disputes well in advance.

...But first, ensure your own financial security

When planning to gift property or money to their children during their lifetime, senior citizens must first grasp a fundamental point: the question of how much to retain for themselves is more important than the act of giving. Experts clearly advise that parents should first set aside sufficient funds and property to maintain their standard of living, cover regular expenses, and meet future healthcare and medical needs. Additionally, maintaining a financial buffer for unforeseen expenses and emergencies associated with aging is essential. This ensures they do not become financially dependent on their children after gifting away their assets.

Vinita Sejwal, a lawyer at the Delhi High Court, states that the foundation of a lifetime gifting plan rests on securing the donor's own financial future. Senior citizens should reserve adequate funds to maintain their lifestyle, meet routine expenses, and cater to future medical and health requirements. They should also keep sufficient reserves for unexpected circumstances.

Experts believe there is no standard formula for this; the calculation depends on the senior citizen's income, total assets, liabilities, and financial needs. Only assets or funds that are truly surplus—remaining after all these needs are met—should be considered for gifting to children.

Why does gifting during one's lifetime simplify succession?

The greatest advantage of transferring property during one's lifetime is that parents can explain the rationale behind their decisions while they are still present. This becomes even more... This becomes particularly important when children are being given assets of varying values ​​or different types.

According to Gudipati Gayatri Kashyap, a lawyer at the Delhi High Court, "Gifting assets during one's lifetime can be a far more effective method of succession than leaving the entire estate for division after death. It allows parents to clarify their intentions, address concerns among their children, and resolve any differences while they are still present."

Often, disputes following a parent's demise go beyond mere legal entitlements; arguments arise over who cared for the parents the most, who contributed more financially, or whether one child was favored over another. That is why transparency is crucial. If parents are gifting assets unequally, they should clearly explain the reasons behind it. Furthermore, this gifting plan should align with other comprehensive succession strategies, such as a will.

Cash, Shares, or Property: Which is Better to Gift?

No single asset class can be deemed the best for lifetime asset transfers. The decision depends on liquidity needs, tax regulations, and whether the senior citizen requires income from the asset or needs to use it personally. Cash is the easiest to transfer and provides immediate liquidity to the recipient. Transferring listed shares and mutual funds—along with the associated documentation—is also relatively simple. Regarding property, land, and gold, these are suitable choices if the objective is to pass on assets that appreciate in value over time.

However, great caution is required when dealing with immovable property, as it is illiquid and cannot be easily divided. Additionally, transferring immovable property involves costs related to valuation, stamp duty, and registration.

Disclaimer: This content has been sourced and edited from Money Control. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.