Insights

Three Ways for Parents to Leave Property to Their Children in Ningbo

Ningbo Author：LuXu WANG

Many people think that the only child can inherit all the inheritance of their parents, but in fact, it is not necessarily: when one of the parents leaves first and the other is alive, the inheritance will be inherited by the living spouse and children together; those who are alive will have a share of the pie; brothers and sisters, transfer inheritance and subrogation inheritance may dilute the share of the only child. Rather than leaving your children with a lawsuit after you’re gone, it’s better to arrange your assets clearly while you’re still alive. Directly to the conclusion: parents leave their property safely to their children. There are three mainstream tools-giving during their lifetime, making wills and allocating insurance policies, each of which has applicable scenarios and legal effects. The common key is "orientation": it is stated that the property is only for the children and has nothing to do with their spouses, and the necessary registration and document procedures are completed before their death. The three tools can be used individually or in combination, but none of them guarantees success simply by being adopted; the success or failure hinges on the details of implementation.

1. Why can't we just rely on "waiting for inheritance"?

Statutory succession follows the order of inheritance set forth in Article 1,127 of the Civil Code: the first order of heirs comprises the spouse, children, and parents. When both parents die, if their parents (the child’s grandparents) are still alive, the grandparents and the only child are both first‑order heirs. If one parent dies and the surviving parent remarries and has additional children, the inheritance relationship becomes even more complex. In addition, there are two “hidden doors”:

  1. sub-inheritance (Article 152nd): If the successor dies after the inheritance begins and before the inheritance is divided, the share of the successor shall be transferred to the successor-if the child dies before the parents finish the inheritance, the grandchildren, daughter-in-law and son-in-law may intervene;
  2. Succession by Representation (Article 1,128): If a child of the deceased dies before the deceased, the deceased’s grandchild or other descendant shall inherit by way of representation. In large families, the share of a child who passes away first does not “disappear”; instead, it is inherited by that child’s descendants.

Conclusion: Statutory inheritance is a “distribution according to the legal script,” but this script may not align with the parents’ wishes. A will and advance directives are the power to rewrite the script.

2. Tool 1: Lifetime gifts

A gift (Article 657 of the Civil Code) refers to the transfer of property from parents to their children during the parents’ lifetime. Its advantage is that it is a one-step process, eliminating post‑death procedures; however, once the property is transferred, the parents lose control over it. Two key points to note:

  1. clearly states "gift to individual children": it is clear in the gift contract that the property is given to individual children as their personal property and has nothing to do with their spouses-according to the third item of article 1063 of the civil code, the property that only belongs to one party is determined as personal property in the gift contract, which can prevent the property from being divided due to the marriage of children;
  2. Agreed-upon right of residence to safeguard elderly care: In practice, there are cases where children, after inheriting a home, fail to fulfill their duty to support their parents or even sell the property, leaving the elderly without a place to live. The solution is to establish the right of residence for parents on the donated property (articles 366 to 371 of the Civil Code, the right of residence is established by registration), the parents retain the right of life residence, and the house is given to their children and the elderly cannot be driven away-this is a combination of "gift + right of residence" that Ningbo families are particularly worthy of adopting.

Tax Tips: For real estate gifts between immediate family members, the recipient needs to pay deed tax (implemented according to the local tax rate in Ningbo), and the tax cost of selling after the gift should be calculated in advance; in some cases, it is more economical to transfer the ownership by way of sale, which is subject to the tax window accounting.

3. Tool 2: Making a will

Influenced by traditional beliefs, many people shy away from making a will during their lifetime, only to find that after their death, the heirs disagree and end up in court. The core value of a will lies in its “specificity”: who you want to benefit, how much they will receive, and any conditions attached—clearly set forth in writing ahead of time. The Civil Code stipulates six forms of wills:

  1. Holographic Will: The testator shall write the will by hand, sign it, and indicate the year, month, and day (Article 1,134);
  2. Holographic Will: It must be witnessed by two or more witnesses, with one of them acting as the scrivener; the date (year, month, and day) must be indicated, and the testator, the scrivener, and the other witnesses must sign it (Article 1,135).
  3. Holographic Will: At least two witnesses are required; the testator and the witnesses must sign each page and indicate the year, month, and day (Article 1,136)—holographic wills are prone to defects, and signing each page is a critical requirement.
  4. Audio-visual will: witnessed by two or more witnesses, with their names or likenesses and the date (year, month, and day) recorded (Article 1,137);
  5. Oral will: May only be made in emergency situations and must be witnessed by two or more persons; if, after the emergency has ceased, a will can be executed in written form or by audio or video recording, the oral will shall be invalid (Article 1,138).
  6. Notarized will: executed through a notary public agency (Article 1,139).

Key points to remind: after the implementation of the Civil Code, notarized wills no longer have priority, and there are several conflicting wills, the last one shall prevail (Article 1142)-the old man's later handwritten wills can change the content of the previous notarized wills, but in order to avoid disputes, it is still recommended to handle notarization at the same time when changing the content of notarized wills; the will must reserve the necessary share for the heirs who lack the ability to work and have no source of income (must retain a share, article 1141).

It can also be stated in the will that "the above-mentioned property is inherited by my child so-and-so, not as the joint property of husband and wife"-according to the third item of article 1063 (it is determined in the will that the property belonging to only one party is personal property), to prevent the children from being divided by marriage.

4. Tool 3: Configure the insurance policy

Commercial insurance—especially high‑value life insurance policies—is increasingly becoming a standard tool for wealth succession. Its advantages include: the death benefit payable to a designated beneficiary does not form part of the estate (Article 42 of the Insurance Law), eliminating the need for probate proceedings and exempting it from statutory inheritance distribution, while also offering leverage. Key configuration points for a legacy-oriented approach:

  1. Policyholder arrangement: With the parents as the policyholders and the children as the beneficiaries, the policy’s cash value is considered the parents’ property and will not be subject to division in the event of the children’s divorce; upon the parents’ death, the death benefit will be paid to the designated beneficiary (the children).
  2. Beneficiary must be clearly specified: Provide the full name to prevent the insurance proceeds from reverting to the estate due to the designation “legal beneficiary”;
  3. Anti-wasteful design: A large death benefit paid in a lump sum to the children may lead to trouble if they lack financial management skills. Consider establishing an insurance trust that provides benefits in installments and subject to specified conditions.
  4. Coordination with Wills and Gifts: Life insurance policies manage cash flow, wills govern real estate and equity not held within insurance policies, and gifts facilitate transfers during one’s lifetime. This triad can cover the vast majority of family assets.

5. How to choose among the three tools?

Reference Table (Select as Needed):

  1. Control: Gift—control is lost upon transfer (can be partially mitigated by establishing a right of habitation); Will—full control during lifetime, takes effect upon death; Insurance policy—policyholder controls the cash value until death.
  2. Preventing marital breakdown of children: All three methods can achieve this by clearly designating the property as belonging solely to an individual (through a gift contract, a will provision, or beneficiary designation).
  3. Preventing children from squandering assets: gifts are the least effective; a will with conditional inheritance can be used; life insurance plus a trust is the most effective.
  4. Procedure Costs: Gift (transfer registration)> Will (no registration required, but may require notarization or court confirmation upon inheritance)> Insurance policy (simplest claim procedure);
  5. Taxes and Fees: Property gifting is subject to deed tax; property inherited via will is tax-exempt (inheritance transfer is exempt from deed tax and individual income tax); insurance proceeds are generally not taxable (subject to current tax policies).

6. Implementation management of combination tools and legacy documents

Each of the three tools addresses a specific aspect; for established families, succession planning is typically implemented as a comprehensive, multi-pronged approach, executed through a “document management” framework.

  1. Division of labor according to asset types: real estate-"gift + right of residence" or directional inheritance by will; financial assets-designated beneficiary of insurance policy + insurance trust; enterprise equity-orientation of gift agreement + restriction of articles of association + holding by trust when necessary (refer to related articles on succession of family business); cash and creditor's rights-listed in will or partial gift before death. No single tool can cover all asset classes; a diversified portfolio is the norm.
  2. The connection between the will and the gift: the donated property is no longer an estate, so do not repeat the disposition in the will to avoid the confusion of ownership caused by "the gift is written into the will"; the will should be written "this will disposes of all the other properties under my name", and attach a list of property for easy checking;
  3. Tax Burden on Inheritance and Gifts Under China’s Current Tax Law: Inheritance tax and gift tax have not yet been levied in our country. Inheritance and gift real estate between immediate family members should pay corresponding taxes according to the current policy (inheritance transfer is exempt from deed tax, and gift transfer involves deed tax). The tax cost of inheritance is generally controllable, but the policy may change. It is recommended to check the latest standard with the tax window or professionals before large inheritance;
  4. Document List and Custody: Establish Inheritance Document List: Register the deposit location of the gift contract, the original will, the insurance policy, the real estate certificate and the certificate of deposit item by item, and designate one or two trusted family members to know it; It is better to give the original will to the executor or notary office for safekeeping than to lock it in one's own drawer-a will that cannot be found is equal to no will;
  5. Regular inspection: after the changes of family structure (remarriage, newborn, children's divorce) and property form (house sale, demolition, equity change), update the will and list synchronously; if there are several wills, confirm the last one is valid and mark the date, so as to avoid the dispute of "which one shall prevail.

To reiterate the core concept: inheritance is not “completing a single procedure,” but rather “managing a set of documents.” Treat gifts, wills, and insurance policies as part of an asset portfolio that requires ongoing management: update them regularly, keep them securely stored, and inform a trusted individual. Only then can the lifetime savings of your parents truly be passed on to their children according to their wishes.

7. Differences in plans between only-child families and multi-child families

Succession plans should vary depending on the “family structure”:

  1. One-child families also need planning: the only child may not "get all"-when the father or mother dies first, the inheritance will be inherited by the living spouse and children together, and the surviving grandparents will also participate in the distribution; If the children die before the parents, the grandchildren will inherit in subrogation (Article 128); If the inheritance behind the parents is not divided in time and the children's marriage change and debt are in debt, the inheritance income may be diluted or executed. Only children are not “natural sole heirs”; a will is still necessary.
  2. Fairness design of families with many children: direct "a bowl of water is balanced" may not be fair-children's contribution to their parents' care and economic situation are different, wills can be distributed differently and the reasons can be stated to reduce the suspicion of "why he has more than I have less"; such indivisible assets as houses can be agreed to be inherited by the party who takes care of more parents or has financial difficulties, and the party can make cash compensation for other children, avoid the zero-sum game of "who owns the house;
  3. Rhythm of giving gifts in batches before death: families with many children can agree to give gifts in batches and confirm in writing during the lifetime of their parents, and the part completed before death will not enter the inheritance, thus reducing the pressure of distribution behind them; each gift should be written "to the individual of the donated children" to prevent the risk of marital change at the same time;
  4. Dispute Prevention Mechanism: An executor is appointed in the will (which can be assumed by trusted relatives and friends or notary institutions). If necessary, an estate administrator is set up to be responsible for counting the estate, notifying the heirs and distributing according to the will (Articles 145 to 149 of the Civil Code); The heirs agreed to negotiate before litigation to keep family conflicts out of court.

No matter how many children there are, the principle remains the same: clearly outline the distribution rules in advance, ensure all relevant documents and proof are in order, and designate a clear executor—so that “dividing the estate” becomes a matter of following established procedures, rather than turning into a post‑death scramble.

Key Points of Judgment Reference: Reference Case of People's Court's Case Database (Storage No. 2024-07-2-102-003) Case of Dispute over Gift Contract between Zhang Mouru and Qin Mouzi (First Instance: Beijing Second Intermediate People's Court [2023] Jing 02 Min Chu No. 77) Judgment Essentials: The gift contract with the condition of reserving the right of residence is an obligatory gift contract. After signing and registration of the contract, if the recipient sells the house without authorization and fails to perform the obligations attached to the gift in accordance with the contract, and the donor claims to revoke the gift and return the house, the people's court shall support it. Case source: Case Database of the People’s Courts.

8. Frequently Asked Questions

If a house is transferred to the children during the owner’s lifetime, will the elderly still have financial security?

Yes, use the right of residence. At the time of property transfer, residence rights are registered for the parents, ensuring they can live there for life. However, properties with such residence rights attached are rarely sought after by buyers, effectively safeguarding the elderly’s right to housing; coupled with a written agreement on filial obligations, this provides a dual layer of protection.

Can a will be changed after it has been made?

Yes. A will may be revoked or amended at any time; if multiple wills contain conflicting provisions, the latest valid will shall prevail (Article 1,142). When amending a previously notarized will, it is advisable to do so in notarized or written form and to retain relevant evidence, thereby minimizing disputes during the execution phase.

What should you do if, after leaving your property to your children, it gets divided in their divorce?

The key lies in "orientation": it is stated in the gift contract or will that "it is only owned by the children", which is personal property (item 3 of Article 1063); if inheritance has occurred but has not been fixed, the children and their spouses can sign a husband and wife property agreement to make it clear that the property belongs to the children. Both types of documents must be in writing, and the originals must be retained.

How can I best arrange to leave my assets to my grandchildren?

Grandchildren can be designated directly in the will to inherit (it is a bequest when the grandchild is a "person other than the legal heir" outside the scope of the subrogation heir, and you must pay attention to the 60-day acceptance rule); testamentary trust can also be established and managed by the trustee; large funds can be insured and the grandchild can be designated as the beneficiary. The choice of tools depends on the type and value of the property.

After parents gift a house to their children, can the parents prevent the children from mortgaging or selling it?

The ownership has been transferred after the completion of the donation. In principle, parents have no right to prevent their children from disposing of the property, unless legal conditions are set when the donation is made (such as obligatory donation and reservation of the right of residence)-after the registration of the right of residence, although the property is sold, the buyer cannot drive away the owner of the right of residence, which is the most practical "anti-eviction" tool at present. If you want to retain more control, consider inheritance rather than a gift.