Gift agreement vs will: which one suits you?

The apartment is in the parent's name, but an adult child helps them every day. The wish is clear: after death, the home should pass to that very child. The question arises when choosing between a gift agreement vs a will. Both can direct property to the desired person, but their effects, timing and risks differ considerably.

The right choice depends not only on whom you wish to give the property to. You must also consider whether you still need to use the property yourself, whether a dispute may arise within the family, whether the donor's financial situation may change, and what rights other close relatives have. We explain the options in plain terms so that the decision is not made in haste or based solely on one acquaintance's experience.

Gift agreement vs will: the key difference

Under a gift agreement, property is transferred during the donor's lifetime. Where the subject matter is, for example, an apartment, house or plot of land, the transaction is executed before a notary and the new owner is entered in the land register. Once ownership has passed, that property is generally no longer the donor's and will not subsequently form part of their estate.

A will, by contrast, is a disposition taking effect upon death. The testator remains the owner of their property for their entire lifetime, and the heir acquires the property only after the testator's death and the completion of probate proceedings. Until that time, the will may be amended, revoked or replaced by a new will.

This difference is far-reaching. A gift agreement confers rights on the recipient immediately; a will leaves control over the property with the testator. The question is therefore not merely one of the form of documents, but of when you wish to transfer ownership in practice.

When may a gift agreement be the appropriate choice?

A gift agreement may be justified where you wish to transfer property immediately and trust the recipient completely. For example, a parent may wish to give an apartment to a child who will look after it, carry out renovations or take on the costs associated with the dwelling. Sometimes the aim is to settle the ownership arrangement clearly during the donor's lifetime so that co-ownership between several heirs does not arise later.

When donating real property, the donor need not necessarily give up the home or the right of use. The agreement may provide for a personal right of use or a lifelong right of residence. Such a right should be properly formalised and, where necessary, entered in the land register. This gives the donor clearer protection even if the new owner later wishes to sell the property or if the owner incurs debts.

In certain cases, obligations may also be included in the gift agreement. For example, the recipient may undertake to maintain the property, pay utility costs or perform another agreed task. Precise drafting is essential here. If the actual intention is for the child to care for the parent until the end of their life, a simple gift agreement may not afford sufficient protection. In such a case, the situation must be assessed as a whole and an agreement chosen that genuinely describes the parties' obligations, not merely in its heading.

The strength of a gift agreement is clarity: ownership changes immediately. Its weakness is the same — once ownership has been transferred, the donor can no longer make free decisions about the property. The recipient may sell or mortgage the real property, or it may become subject to the recipient's financial difficulties, enforcement proceedings or family property disputes. The donor's right of residence may reduce the risk but does not eliminate it entirely.

When is a will more practical?

A will is often suitable for a person who wishes to retain control over the use and management of their property during their lifetime. This is particularly important where, for example, they live in the apartment, may wish to sell the property in the future, or their financial situation may change. A will makes it possible to designate an heir, divide property among different individuals, and make decisions without prematurely relinquishing ownership.

A will is also flexible when family relationships or the composition of assets change. A new will may revoke a prior one, and a will can be amended in accordance with one's wishes. This does not mean, however, that the document can lie in a drawer for decades. Life events such as marriage, divorce, the birth of a child, the purchase of new real property or the death of a loved one are all reasons to review a will.

With a will, one can think more broadly than simply the question of who receives the apartment. It is possible to designate heirs in shares, make specific dispositions regarding individual items, or consider appointing an executor where the estate is complex. For example, in the case of a business interest, multiple real properties or strained family relationships, clear instructions can prevent later disputes.

A will may be notarial or, under the conditions prescribed by law, drawn up at home. A home-made will may appear straightforward at first glance, but disputes arise more frequently in connection with this form: whether the document satisfies the formal requirements, whether it expresses the genuine intention, and whether it can be found and proved at a later stage. A notarial will helps reduce these risks, as the notary verifies the identity of the testator and the form of the declaration of intent, and the will is kept in the register.

Family, the forced share and potential disputes

A decision to transfer property does not always take place in a vacuum. Where there are several children in the family, a spouse, children from a previous relationship or a close person who is financially dependent on the testator, it is worth considering potential claims and conflicts before making a decision.

Under Estonian succession law, certain close persons may be entitled to a forced share if they would have been statutory heirs and the testator owed them a maintenance obligation. The forced share does not automatically confer a right to a specific apartment or house but generally gives rise to a monetary claim. Its amount and prerequisites depend on the circumstances, which is why the mere existence of a will cannot be taken to mean that all other potential claims are excluded.

Gifts made during the donor's lifetime may also be of significance in the event of a dispute. Particular care must be taken where property is donated shortly before death, where the donor's health or capacity to make decisions is diminished, or where the transaction leaves the donor without the means necessary for their subsistence. In some cases, a dispute may concern the validity of the transaction, the donor's actual intention or potential claims by close relatives.

Where one child has cared for a parent for years while another has not been involved in the relationship, an unequal share of the estate often seems humanly fair. Legally, however, one must distinguish between a moral expectation, actual assistance and documented agreements. If remuneration or property is to be given in return for care or the bearing of costs, this should be carefully considered and, where necessary, formalised in a manner that leaves no room for interpretation later.

Do not decide on the basis of taxes or speed alone

Estonia has no general inheritance or gift tax, but that does not mean the choice is without cost or consequence. A real property transaction entails notary fees and state fees. In addition, a subsequent sale of the property may give rise to tax questions, the answers to which depend, among other things, on the nature of the property, how it was used and how long it has been held by the owner.

Speed can also be misleading. A gift agreement may appear to be a straightforward way of arranging a future inheritance, but in reality it makes the decision more irrevocable from the outset. A will requires probate proceedings after death, but leaves the property under the owner's control for as long as they are alive. The sensible choice depends on which risk is greater in your situation: a later inheritance dispute or premature relinquishment of ownership.

Answer these questions before formalising anything

Before visiting a notary, it is worth considering for yourself whether you need the property for use throughout the rest of your life, whether the recipient may fall into debt or go through a separation, and whether you may wish to change your decision in the future. It is equally important to ask whether the expectations of other family members are known and whether the reasons for the transfer of property are clearly documented.

If the property is co-owned, forms part of the spouses' joint property, is subject to a mortgage or is associated with a tenant, the question becomes even more specific. None of these circumstances can be resolved by a generic template or a one-sentence recommendation. It is necessary to examine the ownership relationship, existing agreements, marital status and the desired outcome together.

It is possible, in certain exceptional circumstances, to reclaim a gift, but your sense of security should not rest on this. The grounds for revocation are limited in law, and a subsequent dispute may be emotionally and financially burdensome. It is far safer to set out rights, obligations and arrangements for use before signing.

If you are uncertain whether a gift agreement or a will is more appropriate in your situation, it is worth calmly assessing the documents and your objectives before entering into any transaction. Eurocity Law Office will listen to your situation, explain the options in plain terms and find a solution that protects both your wishes and your everyday peace of mind.