gift

Gift

A voluntary transfer of property or of a property interest from one individual to another, made gratuitously to the recipient. The individual who makes the gift is known as the donor, and the individual to whom the gift is made is called the donee.

If a gratuitous transfer of property is to be effective at some future date, it constitutes a mere promise to make a gift that is unenforceable due to lack of consideration. A present gift of a future interest is, however, valid.

Rules of Gift-Giving

Three elements are essential in determining whether or not a gift has been made: delivery, donative intent, and acceptance by the donee. Even when such elements are present, however, courts will set aside an otherwise valid gift if the circumstances suggest that the donor was, in actuality, defrauded by the donee, coerced to make the gift, or strongly influenced in an unfair manner. In general, however, the law favors enforcing gifts since every individual has the right to dispose of Personal Property as he or she chooses.

Delivery Delivery of a gift is complete when it is made directly to the donee, or to a third party on the donee's behalf. In the event that the third person is the donor's agent, bailee, or trustee, delivery is complete only when such person actually hands the property over to the donee.

A delivery may be actual, implied, or symbolic, provided some affirmative act takes place. If, for example, a man wishes to give his grandson a horse, an actual delivery might take place when the donor hires someone to bring the horse to the grandson's farm. Similarly, the symbolic delivery of a car as a gift can take place when the donor hands the keys over to the donee.

Delivery can only occur when the donor surrenders control of the property. For example, an individual who expresses the desire to make a gift of a car to another but continues to drive the car whenever he or she wishes has not surrendered control of the car.

A majority of states are practical about the requirement of a delivery. Where the donor and the donee reside in the same house, it ordinarily is not required that the gift be removed from the house to establish a delivery. If the donee has possession of the property at the time that the donor also gives the person ownership, there is no need to pass the property back and forth in order to make a legal delivery. Proof that the donor relinquished all claim to the gift and recognized the donee's right to exercise control over it is generally adequate to indicate that a gift was made.

In instances where delivery cannot be made to the donee, as when the person is out of the country at the time, delivery can be made to someone else who agrees to accept the property for the donee. If the individual accepting delivery is employed by the donor, however, the court will make the assumption that the donor has not rendered control of the property and that delivery has not actually been made. The individual accepting delivery must be holding the property for the donee and not for the donor.

In situations where the donee does not have legal capacity to accept delivery, such delivery can be made to an individual who will hold it for him or her. This might, for example, occur in the case of an infant.

Donative Intent Donative intent to make a gift is essentially determined by the donor's words, but the courts also consider the surrounding circumstances, the relationship of the parties, the size of the gift in relation to the amount of the donor's property as a whole, and the behavior of the donor toward the property subsequent to the purported gift.

The donor must have the legal capacity to make a gift. For example, Infants or individuals judged to be unable to attend to their own affairs have a legal disability to make a gift.

In addition, an intent to make a gift must actually exist. For example, a landlord who rents a house to a tenant does not have the intent to give such premises to the tenant, even though the tenant takes possession for an extended period of time. Similarly, a gift to the wrong person will not take effect. If an individual mistakenly gives gold jewelry to an imposter who is believed to be a niece, the gift is invalid because there was no intention to benefit anyone but the niece.The intent must be present at the time the gift is made. For example, if one person promises to give a house to an artist "someday," the promise is unenforceable because there is no intent to make an effective gift at the time the promise is made. The mere expectation that something will someday be given is not legally adequate to create a gift.

Acceptance The final requirement for a valid gift is acceptance, which means that the donee unconditionally agrees to take the gift. It is necessary for the donee to agree at the same time the delivery is made. The gift can, however, be revoked at any time prior to acceptance.

A court ordinarily makes the assumption that a gift has been accepted if the gift is beneficial, or unless some event has occurred to indicate that it is not.

Types of Gifts

The two principal categories of gifts are inter vivos gifts and causa mortis gifts.

Inter vivos gifts Inter vivos is Latin for "between the living" or "from one living person to another." A gift inter vivos is one that is perfected and takes effect during the lifetime of the donor and donee and that is irrevocable when made. It is a voluntary transfer of property, at no cost to the donee, during the normal course of the donor's life.

A gift inter vivos differs from a sale, a loan, or barter since something is given in exchange for the benefit in each of such transfers. Whether the value given is a money price, a percentage interest or an equivalent item of property, or a promise to repay, the element of exchange makes such transfers something other than a gift.

There are a number of special types of inter vivos gifts. Forgiveness of a debt is a gift of the amount of money owed, and delivery can be accomplished by destroying the promissory note signed by the debtor and handing it over to him or her. A share of stock in a corporation may ordinarily be given to someone else by having ownership transferred to the person on the books of the corporation or by having a new stock certificate issued in the person's name. A life insurance policy can generally be given to someone by delivering the policy, but it is more expedient to express in writing that all interest in the policy is assigned, or transferred, to the donee and to notify the insurance company to that effect. Certain states require these formalities since insurance is strictly regulated by state law. Gifts of land can only be made by written transfer.

A donor can limit an inter vivos gift in certain ways. For example, he or she might give someone a life estate in his or her property. When the donee dies, the property reverts to the donor. A donor cannot place other restrictions on a gift if the restrictions would operate to make the gift invalid. If, for example, the donor reserves the power to revoke a gift, there is no gift at all.

Causa Mortis Gifts A gift causa mortis (Latin for "in contemplation of approaching death") is one that is made in anticipation of imminent death. This type of gift takes effect upon the death of the donor from the expected disease or illness. In the event that the donor recovers from the peril, the gift is automatically revoked. Gifts causa mortis only apply to personal property.

A donor who is approaching death might make a gift by putting his or her intention in writing. This procedure is likely to be followed, when, for example, the donee is in another state, and personal delivery is thereby impractical. The delivery requirement is frequently relaxed when a causa mortis gift is involved, since a donor is less likely to be able to make an actual delivery as his or her death approaches. A symbolic delivery is frequently sufficient to show that a gift was made, provided at least some effort to make a delivery is exercised. The Overt Act aids a court in its determination as to whether a delivery has been made.

The difference between a gift causa mortis and a testamentary gift made by will is that a will transfers ownership subsequent to the death of the donor, but a gift causa mortis takes effect immediately. In most states, the donee becomes legal owner of the gift as soon as it is given, subject only to the condition that the gift must be returned if the donor does not actually die.

The requirements of a causa mortis gift are essentially the same as a gift inter vivos. In addition, such a gift must be made with a view toward the donor's death, the donor must die of the ailment, and there must be a delivery of the gift.

Gifts causa mortis are usually made in a very informal manner and are frequently made because dying people want to be certain that their dearest possessions go to someone they choose.A donor who is approaching death might make a gift by putting his or her intention in writing. This procedure is likely to be followed, when, for example, the donee is in another state, and personal delivery is thereby impractical. The courts only permit the donee to keep the gift if the donor clearly intended the gift to take effect at the time it was made. If the gift is made in writing in a will and is intended to become effective only after the donor dies, the gift is a testamentary one. The law in each jurisdiction is very strict about the features that make a will valid. One requirement, for example, is that the will must be signed by witnesses. If the donor writes down that he or she is making a gift, but the writing is neither an immediate gift nor a witnessed will, the donee cannot keep the gift.

The delivery requirement is frequently relaxed when a causa mortis gift is involved, since a donor is less likely to be able to make an actual delivery as his or her death approaches. A symbolic delivery is frequently sufficient to show that a gift was made, provided at least some effort to make a delivery is exercised. The overt act aids a court in its determination as to whether a delivery has been made.

A gift causa mortis is only effective if the donor actually dies. It is not necessary that the donor die immediately, but the person must die of a condition or danger that existed when the gift was made and without an intervening recovery. The donee becomes legal owner of the property in most states from the time the gift is made. The person must, however, later return the gift if the donor does not actually die. If the donor changes his or her mind and revokes the gift, or recovers from the particular illness or physical injury, the gift is invalid. A donor also has the right to require that debts or funeral expenses be paid out of the value of the gift.

Further readings

Bove, Alexander A. 2000. The Complete Book of Wills, Estates, and Trusts. New York: Holt, Henry.

"Landlord's Estate May Include Tenant's Improvements to Lease Property." 2002. Tax Return Preparer's Letter (July).

gift

n. the voluntary transfer of property (including money) to another person completely free of payment or strings while both the giver and the recipient are still alive. Large gifts are subject to the federal gift tax, and in some states, to a state gift tax. (See: gift tax, unified estate and gift tax)

gift

GIFT, conveyancing. A voluntary conveyance; that is, a conveyance not founded on the consideration of money or blood. The word denotes rather the motive of the conveyance; so that a feoffment or grant may be called a gift when gratuitous. A gift is of the same nature as a settlement; neither denotes a form of assurance, but the nature of the transaction. Watk. Prin. 199, by Preston. The operative words of this conveyance are do or dedi. The maker of this instrument is called the donor, and he to whom it is made, the donee. 2 B. Com. 316 Litt. 69; Touchs. ch. 11.

GIFT, contracts. The act by which the owner of a thing, voluntarily transfers the title and possession of the same, from himself to another person who accepts it, without any consideration. It differs from a grant, sale, or barter in this, that in each of these cases there must be a consideration, and a gift, as the @definitionstates, must be without consideration.
     2. The manner of making the gift may be in writing, or verbally, and, as far as personal chattels are concerned, they are equally binding. Perk. Sec. 57; 2 Bl. Com. 441. But real estate must be transferred by deed.
     3. There must be a transfer made with an intention of passing the title, and delivering the possession of the thing given, and it must be accepted by the donee. 1 Madd. Ch. R. 176, Am. ed. p. 104; sed vide 2 Barn. & Ald. 551; Noy's Rep. 67.
     4. The transfer must be without consideration, for if there be the least consideration, it will change the contract into a sale or barter, if possession be delivered; or if not, into an executory contract. 2 Bl. Com. 440.
     5. Gifts are divided into gifts inter vivos, and gifts causa mortis; and also' into simple or proper gifts; that is, such as are to take immediate effect, without any condition; and qualified or improper gifts, or such as derive their force upon the happening, of some condition or contingency; as, for example, a donatio causa mortis. Vide Donatio causa mortis; Gifts inter vivos; and Vin. Ab. h. t.; Com. Dig. Biens, D 2, and Grant; Bac. Ab. Grant; 14 Vin. Ab. 19 3 M. & S. 7 5 Taunt. 212 1 Miles, R. 109.