Latin legal phrases like this one are often best understood by the pair of terms they are usually contrasted with in law, rather than by breaking down the roots directly.
In the law of gifts and trusts, a transfer of property is usually classified into one of two kinds: one made while the giver is alive, and one made through a will, taking effect only after death. The second kind has its own well-known Latin label, "testamentary," tied to a will. "Inter vivos" is the label for the first kind, a transfer that takes effect during the lifetime of the person making it, precisely because it happens "between the living," as opposed to after death.
None of the other options describe this kind of living-to-living transfer. Getting a legacy happens after death, not during life. A country's welfare and an agreement between warring nations both belong to completely different areas, unrelated to how or when a transfer of property takes effect.
Once "inter vivos" is placed against its usual legal opposite, "testamentary," the meaning becomes clear.
So, the correct answer is a transaction made between living people.
Looking at the grammatical shape of "inter vivos" first narrows things down before even worrying about the exact meaning. Let's check each option this way.
Since "inter vivos" grammatically functions as a condition describing when a transaction happens, only the option phrased the same way, as a timing condition rather than a purpose or subject matter, fits.
So, the correct answer is a transaction made between living people.