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Insights · 6 min read

Wills, Gifts and Legacies: Differences, Limits and the Role of the Notary

Wills, gifts and legacies are often confused. Understand the differences, the limits of the reserved portion and the one-third rule in the KHI, and the role of the notary.

Ibu Lestari (a pseudonym) wants to make sure that her youngest daughter, who has cared for her for ten years, will one day receive the house they share. One friend suggested that the house "should just be given now so it's settled". Another friend suggested that a will would be enough. Ibu Lestari also has two other children who live in other cities, and she does not want her good intentions to become a source of conflict later on. (This illustration is fictional and anonymised.)

Ibu Lestari's question touches on the three instruments most often used to arrange the transfer of property outside the ordinary division of an estate: the will (wasiat), the gift (hibah) and the legacy (hibah wasiat). All three are valid and useful, but each has a different time of effect, formal requirements and limits.

Three instruments, three times of effect

A gift (hibah) is made during one's lifetime. The giver hands property to the recipient free of charge, and the transfer takes effect while the giver is still alive. In the Civil Code (KUHPerdata), gifts are regulated from Article 1666 onwards, and in principle a gift cannot be revoked except in certain circumstances set out in Article 1688.

A will (wasiat or testament) is a statement of what is to happen to a person's property after their death. A will only takes effect after the testator dies, and during their lifetime the testator may revoke or change it.

A legacy (hibah wasiat or legaat) is a part of a will that designates a specific item, or a specific set of items, to be given to someone. For example, "I give the house on Jalan Melati to my daughter." Unlike the appointment of an heir, who receives the whole or a share of the estate, the recipient of a legacy receives a specific item. Like any will, a legacy only takes effect after the giver dies.

Limits in the Civil Code: the reserved portion

The freedom to arrange property through gifts and wills is not unlimited. The Civil Code protects heirs in the direct line through the reserved portion (legitieme portie or bagian mutlak), regulated from Article 913 onwards. This portion cannot be reduced, either by gifts made during one's lifetime or by a will.

The size of a child's reserved portion depends on the number of children. In brief, Article 914 of the Civil Code sets it at one half of the statutory share if there is one child, two thirds if there are two children, and three quarters if there are three or more children.

If a gift or will turns out to infringe the reserved portion, the heir who is disadvantaged can claim a reduction (inkorting). This claim is subject to a time limit set by law. For this reason, a large gift to one child made many years earlier can still be taken back into account when the estate is opened.

Limits in the Compilation of Islamic Law: one third

For Muslim families, the Compilation of Islamic Law (KHI) sets different limits:

  • A will may cover at most one third of the estate, unless all heirs agree.
  • A will in favour of an heir is only valid if all heirs agree. That consent may be given orally before two witnesses, or in writing before two witnesses or a notary (Article 195 KHI).
  • A gift is limited to at most one third of the giver's property, and must be made by a person at least 21 years old, of sound mind and without coercion (Article 210 KHI).
  • A gift from a parent to a child may be counted as inheritance (Article 211 KHI). In principle a gift cannot be revoked, except a gift from a parent to their child (Article 212 KHI).

Article 211 is highly relevant in situations like Ibu Lestari's. A gift of a house to one child does not automatically "leave" the inheritance calculation. The gift may be counted against that child's share when the estate is divided.

The role of the notary

The notary plays an important role in giving the deceased's good intentions firm legal force.

For gifts. The Civil Code requires a gift to be made by notarial deed (Article 1682), with certain exceptions for movable property handed over directly. For land and buildings, a transfer of rights by gift can only be registered at the Land Office (Kantor Pertanahan) if it is evidenced by a deed made by a Land Deed Official (Pejabat Pembuat Akta Tanah, PPAT), as set out in the land registration regulations.

For wills. The Civil Code recognises several forms of will, including a will written by the testator and then deposited with a notary (holographic), a public will made before a notary, and a secret will. A will made or deposited through a notary offers greater certainty because the notary must report it to the Central Register of Wills (Daftar Pusat Wasiat). After the testator dies, whether a will exists can be checked through the certificate of wills service (surat keterangan wasiat), so the heirs do not have to guess whether a will has been deposited.

For the heirs' consent. Under the KHI, the heirs' consent to a will that exceeds one third, or to a will in favour of a fellow heir, can be recorded in writing before a notary. Documentation like this reduces the risk of disputes later on.

Choosing the right instrument

No instrument is always better. Some considerations that are usually discussed:

  • When the transfer is wanted. A gift transfers rights now; a will waits until the testator dies and can still be changed.
  • Control. After a gift, the giver generally no longer controls the property. This needs consideration if the giver still depends on that asset.
  • Fairness between children. Both the BW and the KHI have mechanisms that take lifetime gifts into account. A gift that is too large to one child risks being challenged.
  • Tax and costs. Gifts and inheritance are treated differently for tax purposes, especially for land and buildings. This aspect is best calculated from the start.
  • Openness within the family. Even the tidiest instrument can trigger a dispute if the family does not understand the reasons for it.

In Ibu Lestari's case, the right choice depends on the legal system that applies to her family, the value of the house compared with her property as a whole, and the willingness of the other children to agree to the arrangement.

Key points

  • A gift takes effect during one's lifetime; a will and a legacy (legaat) take effect after the testator dies.
  • Under the Civil Code, gifts and wills must not infringe the reserved portion of heirs in the direct line; an infringement can be challenged by a claim for reduction.
  • Under the KHI, a will is limited to one third of the property and a will in favour of an heir requires the consent of all heirs; a gift from a parent to a child may be counted as inheritance.
  • Under the Civil Code, a gift is made by notarial deed; a gift of land and buildings needs a PPAT deed to be registered.
  • A will made through a notary is recorded in the Central Register of Wills, so the heirs can trace it more easily.

If you are weighing a gift against a will for your family, Parampara's consultation team can help map the options and their consequences.

This article is general information and not legal advice. How the rules on wills and gifts apply depends on each family's facts; consult a qualified notary or advocate about your situation.

Legal basis & references

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