Three Instruments, Three Logics
Transferring property to an heir during the owner’s lifetime is one of the most delicate legal planning tasks. Russian law offers three principal instruments, and the choice between them depends on which risks you are most concerned about managing.
A Will: Flexibility Without Obligations for the Testator
How it works. The testator draws up a document before a notary, specifying who receives what after death. The estate opens upon the testator’s death.
Advantages:
- the will can be changed or revoked at any moment without notifying the heirs,
- the property remains with the testator during their lifetime — they may sell, gift, or mortgage it,
- a familiar and well-understood instrument.
Risks:
- heirs do not know the contents of the will until the testator dies,
- the mandatory share (Article 1149 of the Civil Code) — incapacitated spouses, children, and parents receive at least half of their statutory share regardless of the will’s contents,
- a will can be contested as a transaction — on grounds of incapacity, coercion, or mistake.
An Inheritance Agreement: Obligations During the Testator’s Lifetime
How it works. The prospective testator and the future heir conclude an agreement while both are alive. The agreement sets out who receives what, and may impose obligations on the heir in relation to the testator — care, financial support, or the fulfilment of specific conditions.
Advantages:
- the heir knows the contents of the agreement and can plan accordingly,
- the agreement creates mutual obligations — the testator can be confident the heir will meet the conditions set,
- harder to challenge than a will, since the heir is a party to the agreement.
Risks:
- the testator loses some flexibility: changing or terminating the agreement without the heir’s consent is more difficult (Article 1140.1 of the Civil Code),
- property still remains with the testator during their lifetime, so it can still be alienated (which may frustrate the heir’s expectations),
- judicial practice on inheritance agreements is still developing.
A Gift: Immediate Transfer
How it works. The donor transfers property to the recipient during the donor’s lifetime. Ownership passes at the moment of registration (for real estate) or transfer (for movable property).
Advantages:
- immediate transfer of ownership — the recipient becomes the owner while the donor is still alive,
- no mandatory share applies (gifting is not inheritance),
- lower risk of disputes from other heirs after the donor’s death.
Risks:
- the donor loses the property immediately — they are no longer the owner,
- a gift can only be revoked in strictly limited circumstances (Article 578 of the Civil Code): if the recipient made an attempt on the donor’s life, or in the event of the donor’s bankruptcy within one year of the transaction,
- if the relationship deteriorates, recovering the property is extremely difficult.
Choosing the Right Instrument
| Situation | Recommended instrument |
|---|---|
| I want to retain control and may change my mind | Will |
| I want to lock in the heir’s obligations while I’m alive | Inheritance agreement |
| I want to transfer the property now and am certain of my decision | Gift |
| There are mandatory heirs — incapacitated close relatives | Legal consultation essential |
| A business asset or multiple heirs | Comprehensive planning required |
No single instrument is universal. In complex family situations, with multiple heirs or business assets, the optimal solution typically involves a combination of instruments.
Frequently Asked Questions
Is there personal income tax on inherited property in Russia? No. Property received through inheritance — under a will, an inheritance contract, or by operation of law — is exempt from personal income tax (item 18 of Article 217 of the Tax Code). The exception is copyright royalties and patent income that continues to flow to the heir.
Can a business share be transferred under an inheritance contract? Yes. Inheritance contracts are particularly well-suited to business succession: they allow you to specify precise conditions — who receives the share and what obligations they owe to other heirs or partners. Both parties agree on the terms while the testator is still alive.
What is the mandatory share and can it be avoided? The mandatory share (Article 1149 of the Civil Code) is the guaranteed portion of the estate for incapacitated spouses, children, and parents of the deceased. It equals at least half of what they would have received under intestate succession. Neither a will, an inheritance contract, nor a gift deed eliminates this right. Fully disinheriting a mandatory heir without a court ruling is not possible.
Read Also
- Inheritance Contract: What It Is and Who Needs It
- Pension Savings in Russia: Inherited Money You Can Claim
Want to pass property to your children or other close relatives but unsure which instrument to use? Contact us for a consultation — we will analyse your situation and prepare the optimal property transfer structure.