A gift is a contract whereby one person transfers an asset or right to another free of charge, without any consideration in return. It is a common way of organising family assets and, in many cases, of planning for succession in advance.
When a gift is made between close family members – particularly between parents and children or between grandparents and grandchildren – it can be a useful tool for estate planning, allowing assets to be transferred whilst the donor is still alive and reducing potential conflicts when the estate is divided.
From a tax perspective, donations between spouses, ascendants and descendants are, as a rule, exempt from Stamp Duty. However, even where no tax is payable, the gift must be reported to the tax authorities by submitting a notification of gratuitous transfers.
Where the donation involves immovable property, such as houses or land, the transaction must be formalised by means of a public deed or a notarised private document, followed by the relevant land registry entry.
A frequently used form is the donation with reservation of usufruct. In this case, the donor transfers ownership of the asset to the beneficiary but retains the right to use it or to receive the income it generates during their lifetime.
It is important to bear in mind, however, that donations made to descendants may have an impact on the future inheritance. The law provides for mechanisms designed to ensure equality among heirs, notably through the consolidation of donations or the possible reduction of donations that may affect the reserved share.
For this reason, before making a donation, it is advisable to analyse the tax and inheritance implications of the transaction.
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