Deed of Gift, Last Will and Testament

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

While, in principle, a gift deed has a similar effect to a testamentary will, that is, granting pro bono any rightful property to any person, the basic distinction is in the timing of the instruments. The last will and testament of a property owner takes effect and becomes enforceable only upon the death of the testator. A gift deed, on the other hand, can be made to take effect immediately, or in whatever period of time 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 that should finally be charged against his estate.

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

In any case, legal jurisprudence is based on the principle that nothing is 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.