'I own several properties. Should I leave them to my three children in my will?'

A parent's perennial dilemma is whether to transfer property to their children while still alive, or whether their children should just inherit them when they pass away.

Unfortunately, there is no best option. Every family should manage their affairs as they deem fit. However, it is worth considering some options.

If you don’t need the money from these properties and decide to sell them, you should consider donating them during your lifetime. Here are the advantages:

• You get to decide who receives each property while you’re alive.
• By keeping the usufruct (the right to enjoy the property and its income from, say, rental), you can reduce taxes based on age-related percentages set by the government of Malta.
• It prevents potential conflicts between your children after your death.
• It significantly reduces the work your children will have to face when it comes to your succession.

Control vs donation

The biggest disadvantage of donating property to your children during your lifetime is the loss of control over your property. A donation is irrevocable; once you give the property to your children, you cannot take it back.

Usufruct benefits

Retaining the usufruct allows some control over your property, as the children cannot sell the property without parental consent. It also means you can keep all the rental income, which is useful in retirement.

Personal decision

Ultimately, the decision to donate property is personal. Some parents find peace once the donation contract is signed, while others prefer to maintain control over their assets until death.

Tax considerations

The tax rate is five per cent for both donated and inherited property, except for parents’ last home, which is tax-free upon their death. If parents keep the usufruct, its value is deducted from the property’s value, and tax is calculated on the balance, offering potential tax savings.

The information presented in this article is provided by the Notarial Council for general informational purposes only – for legal or professional advice contact your notary.

If you have any questions you wish to ask the Notarial Council of Malta send any email to notariesofmalta@gmail.com