If Germany would take and keep Estonia and Latvia if would be a direct breach of Secret Protocols of Molotov-Ribbentrop Pact (in effect an act of agression against Soviet Union). I think it is bad idea to allow Germans to hold the territory (in case Molotov-Ribbentrop Pact is signed prior to those territorial gains) without immediate declaration of war against Soviet Union.
The best would be to add an event that is fired if: The player have signed the Molotov-Ribbentrop pact and conquered either of Latvia/Estonia/Lithuania.
In the event Germany can choose to either surrender those territories to Soviet Union, or risk going to war. (Think the aid to Finland in the Finish-Winter-War... I'm pretty sure there's a small risk for war when sending aid to Finland).