In September, the month of wills, one of the most frequently asked questions is whether it is convenient to dispose of a property during one’s lifetime or to make a will, an instrument that takes effect upon the death of the person.
What is better, to dispose of your property during one’s lifetime or to leave it in your will? Learn about the advantages and disadvantages of each option.
This article aims to provide a parameter of the advantages and disadvantages of disposing of a property during one’s lifetime or through succession, anticipating that the transfer of a property does not replace or eliminate the need to make a will regarding the rest of one’s assets or the assets that one has at the time of one’s death.
Disposal of property during one’s lifetime
The owner of a property has, among others, the power to dispose of the property and transfer it. In the civil legislation of Mexico City, various contracts for the transfer of ownership of real estate are regulated, some of which are the following:
If the owner wishes to transfer it in exchange for a certain price and in money, the contract that must be signed is a sale.
If the owner wishes to transfer it free of charge, the contract that must be signed is a donation.
If the owner wishes to transfer it in exchange for another or other assets that are not mostly money, the contract that must be signed is an exchange.
If the owner wishes to transfer it in exchange for a periodic pension for the rest of his life, the contract that must be signed is a life annuity.
The decision of which contract to sign will depend on the will of the owner if he wishes to transfer it for a fee or free of charge and find a buyer who wishes to pay for it or acquire it free of charge.
The signing of any of the aforementioned contracts implies that it takes effect from the moment of its signing and the transfer of ownership operates (as a general rule) by mere effect of the contract. That is, the owner will cease to be the owner.
The way in which contracts that transfer ownership of real estate is in a public deed and implies a tax burden on the buyer (the tax on the acquisition of real estate) and in some cases on the transferor (the tax on income from alienation).
Now, if the owner’s intention is that until the date of his death the property is transferred to another person, the way to express this will is through the legal act called a will.
Why is it important to make a will?
Disposition of real estate after death
A will is the very personal, revocable and free act by which a capable person disposes of all his assets and declares or fulfills duties for after his death. The will is for all the assets he has at the time of death, not at the time of granting it.
It is not necessary to be the owner of a property to grant it, since in real estate matters the granting of the will does not imply the transfer of the property, nor does it imply any limitation on its ownership at the time of granting it. What it does imply is that, upon the death of the person, the property will be transferred to whomever(s) he/she designates, either, in a particular title (legatee) or in a universal title (heir).
In this sense, the legatee is the person who upon the death of the testator will acquire the specific property and the heir is the person who upon the death of the testator will acquire all the assets that are in the estate of the author of the succession at the time of death. The tax burden is generated up to this moment.
Summary of the advantages and disadvantages:
Here are some advantages and disadvantages between disposing during life and disposing in a will:
Transferring during life:
Advantage: Upon the death of the person, no further procedure has to be done to transfer the property.
Disadvantage: The owner transfers all his rights over the property and will no longer have the power to dispose of it while he lives.
Disposing of assets in a will:
Advantage: The owner continues to have access to all his assets without any limitation.
Disadvantage: The succession procedure will have to be carried out in order to subsequently allocate assets by inheritance or legacy.
Conclusion
Regardless of the decision made regarding a property, it is important to make a will because it also serves to dispose of all assets owned at the time of death, including those acquired after making the will (whether movable or immovable), to appoint testamentary guardians for children, to establish alimony or education pensions, and above all, to avoid inheriting problems.
Source: realstatemarket
