Gift Assets to Your Children Now or Leave Everything Through Inheritance?

Anyone planning the transfer of their wealth to their children often wonders whether it is better to gift part of their assets straight away or to wait for them to pass by inheritance, and the question is usually framed in terms of the taxes to be paid. Following the reforms of the last two years, however, the comparison turns less on the tax itself, which is the same in both cases, than on three less obvious aspects: the tax basis the child receives together with the asset, the stability of the deed with respect to the rights of the other heirs and, for business owners, the conditions attached to the exemption for generational transfers.

The tax: identical rules and tax-free allowances that can be used twice

Since 1 January 2025, following Legislative Decree 139/2024, rates and tax-free allowances are set out directly in the Consolidated Law on Inheritance and Gift Tax (Articles 7 and 56 of Legislative Decree 346/1990) and are the same for both taxes: for transfers to a spouse and to lineal relatives, the tax is 4% of the value exceeding €1,000,000 per beneficiary, while for transfers to brothers and sisters it is 6% above a tax-free allowance of €100,000. The only respect in which the two instruments differed concerned the so-called aggregation rule ("coacervo"), i.e. the adding together of gifts previously received from the same person for the purpose of calculating the tax-free allowance, and today that difference survives only for gifts. The inheritance aggregation rule under Article 8(4) of the Consolidated Law, which added to the value of the estate the gifts made by the deceased during their lifetime and which the Italian Revenue Agency applied for the purposes of the tax-free allowance, was held to have been implicitly repealed by the Italian Supreme Court, a position endorsed by the Agency in Circular No. 29/E of 19 October 2023, and was subsequently expressly repealed by Legislative Decree 139/2024. The gift aggregation rule under Article 57, by contrast, still applies: for the purposes of the tax-free allowance, it adds together the gifts previously made by the same donor to the same donee, excluding, among others, those made between 25 October 2001 and 28 November 2006, when the tax had been abolished. As a result, a child can receive assets worth €1,000,000 from a parent by way of gift and further assets of the same value through inheritance without paying any tax, which makes gifting a particularly useful planning tool for larger estates.

Real estate: tax basis of the property and protection of the other heirs after Law No. 182 of 2025

While the tax advantage of a gift is clear, in the case of real estate it is also necessary to consider what will happen when the child decides to sell. A person who receives a property by gift takes over the donor's tax basis and, for the purposes of the tax on capital gains from a sale within five years, the five-year period runs from the date on which the donor acquired the property, whereas properties acquired through inheritance are excluded from this tax (Articles 67(1)(b) and 68 of the Italian Income Tax Code, TUIR). For a recently purchased property it may therefore be advisable not to gift it and to let it pass to the child only on the parent's death, especially if the child is likely to want to sell it soon, since in that case the heir would pay no tax on the capital gain.

From a civil-law perspective, until recently the main drawback of a gift of real estate was its limited marketability: if the gift prejudiced the donor's closest relatives, to whom the law in any event reserves a share of the estate (the so-called forced heirs, or "legittimari"), they could recover the property even from a person who had in the meantime bought it from the donee, provided that twenty years had not elapsed since the gift was registered. Law No. 182 of 2 December 2025, in force since 18 December 2025, has changed this framework: a buyer who acquires the property from the donee is now, in principle, protected, because the forced heir can recover the property only if they have made their claim public by registering the court action in the land registers before the buyer registers their purchase, which in practice very rarely happens. The forced heir may nevertheless claim a sum of money from the donee, to the extent necessary to make up the share to which they are entitled. The new rules apply to successions opened after 18 December 2025 and, since the six-month period provided for by the transitional provision expired on 18 June 2026, also to those opened earlier, unless the forced heir had brought proceedings or formalised their opposition by that date; they also apply to assets other than real estate, including quotas in limited liability companies (S.r.l.) and businesses.

The reform has not, however, abolished the share reserved to the closest family members; it has changed the way in which that share is protected: whereas previously the asset itself could be recovered, today what is obtained is essentially monetary compensation. It therefore remains the case that, on the donor's death, gifts are taken into account together with the rest of the estate to check whether the reserved share has been respected and, if it has not, the child who received more must compensate the others in cash. Likewise, among children, whatever each of them has received from the parent during the parent's lifetime, directly or indirectly, is treated as an advance on their share of the inheritance, and this also applies in the common case of a parent who pays the purchase price of a home registered in the child's name. For the donor, then, the risk is no longer that the asset will be taken away from whoever bought it, but that the donee child will have to compensate their siblings in cash, and it is around this family balance that the decision should be built.

Shareholdings and businesses: the exemption and the family pact

For family businesses, the comparison shifts to the exemption provided for by Article 3(4-ter) of Legislative Decree 346/1990, which applies in the same way to gifts and to inheritance for transfers of businesses, business units and shareholdings to descendants and to the spouse: for corporations, the exemption is available only if the beneficiary acquires or completes legal control within the meaning of Article 2359(1)(1) of the Italian Civil Code and retains it for at least five years; for businesses, the activity must be continued for the same period; and for other shareholdings it is sufficient to retain ownership, in each case by making a specific undertaking in the deed or in the inheritance tax return. A gift has the advantage of allowing the parent to choose the timing and the beneficiary, but it must be carefully structured where the parent wishes to retain the usufruct of the shares: in Orders No. 6614 and No. 6616 of 19 March 2026, issued on the wording of the provision in force before 2025, the Italian Supreme Court denied the exemption in a case where the usufructuary retained the vote on profit distribution, holding that the children had not acquired legal control of the company. Where there is more than one child and the business is intended for only one of them, the most stable instrument remains the family pact ("patto di famiglia", Articles 768-bis et seq. of the Italian Civil Code), to which the spouse and all those who would be forced heirs if the succession were opened at that moment are parties, and whose effects are not subject to collation or abatement (Article 768-quater(4) of the Italian Civil Code). Following Italian Supreme Court judgment No. 29506 of 24 December 2020, endorsed by the Italian Revenue Agency in Resolution No. 12/E of 14 February 2025, the sum that the assignee child pays to their siblings is taxed as a gift from the parent, with the €1,000,000 tax-free allowance rather than the €100,000 allowance applicable between siblings.

How to approach the choice

There is therefore no single answer that fits every family, but some criteria can help guide the decision. A gift makes it possible to use the tax-free allowances twice, to plan the transfer of the business and, after the 2025 reform, to transfer assets that the child will be able to sell or offer as security without difficulty. Conversely, it is advisable to forgo a gift and wait for the assets to pass to the children on the parent's death in the case of recently purchased properties or properties with latent capital gains that are expected to be realised and, more generally, where the parent does not intend to divest themselves of the assets or fears creating imbalances among the children that would in any case resurface on their death. In either case, the choice requires a joint assessment of the tax and civil-law aspects, taking into account the composition of the estate and the family balance.