Gift Inter Vivos

A “Gift Inter Vivos” (Latin for “gift between the living”) refers to a legal term describing a transfer or gift made between living individuals without the expectation or requirement that the recipient provides anything of equal value in return. This type of gift is opposite to “gift causa mortis,” which is a gift made in anticipation of the giver’s death. For a gift inter vivos to be legally binding, certain conditions must be satisfied, which are generally established by common law and statutory law. This document aims to provide a detailed overview of “Gift Inter Vivos,” exploring its legal requirements, implications, and related areas of interest.

For a gift to be considered a valid Gift Inter Vivos, several key elements must be met:

1. Donative Intent

The donor (the person giving the gift) must have a clear and present intent to make a gift. This means that the donor must intend to transfer the ownership of the gift without expecting anything in return.

2. Delivery

The gift must be delivered to the donee (the person receiving the gift). Delivery can be actual (where the item is physically handed over) or constructive (where something symbolizing the item is handed over, such as keys to a car).

3. Acceptance

The donee must accept the gift. Acceptance is generally presumed if the gift is of benefit to the donee and is not burdensome.

4. Competence

Both the donor and donee must have the legal capacity to give and receive the gift. This generally means that they must be of sound mind and of legal age to enter into contracts.

Types of Property Transferred as Gifts Inter Vivos

Tangible Personal Property

This includes physical items such as jewelry, artwork, vehicles, and household goods. For these items, actual delivery is usually required to complete the gift.

Intangible Personal Property

This includes items such as stocks, bonds, bank accounts, and intellectual property. These can often be transferred through documentation and registration with appropriate institutions.

Real Property

This includes land and buildings. Transfer of real property usually requires a deed and must comply with local property laws, including registration with government authorities.

Documentation and Formalities

Though verbal gifts can be legally binding if all elements are satisfied, having formal documentation can help prevent disputes and provide clear evidence of the gift.

Gift Deed

A gift deed is a formal legal document that explicitly outlines the transfer of ownership from the donor to the donee. The deed should include:

Tax Implications

Gift Tax

In many jurisdictions, gifts are subject to a gift tax, which is imposed on the donor. The tax rate and exemption limits can vary, so it is essential to consult local tax laws or a tax professional.

Valuation of Gifts

For the purpose of tax calculation, the fair market value of the gift at the time of transfer is considered. This may require an appraisal, especially for high-value items like real estate.

Reporting Requirements

The donor is typically required to file a gift tax return, even if no tax is due because the gift falls within allowable exemptions.

Revocation of Gift Inter Vivos

Once a gift inter vivos is completed, it generally cannot be revoked. Exceptions to this rule include:

Fraud or Undue Influence

If the donor was coerced or defrauded into making the gift.

If the donor lacked the legal capacity to make the gift at the time of the transfer.

Case Law and Examples

Case Study: Gruen v. Gruen

In this seminal case, a father (donor) gave his son (donee) a valuable painting while reserving a life estate in it for himself. The court upheld the gift despite the father retaining possession of the painting, concluding that all elements of a valid gift inter vivos were met.

Corporate Gifting

Companies may also engage in gift inter vivos practices, often for charitable purposes. For instance, large tech firms like Google (https://about.google/) and charities like the Bill & Melinda Gates Foundation (https://www.gatesfoundation.org/) frequently donate substantial amounts of money or resources as gifts inter vivos.

Ethical and Practical Considerations

Family Dynamics

Gifts inter vivos can sometimes strain family relationships, particularly if perceived as unfair or favoring one member over others.

Professional Advice

Engaging legal and financial advisors can aid in ensuring that the gift complies with applicable laws and tax regulations, and objectively evaluating the implications for both the donor and the donee.

Conclusion

The concept of Gift Inter Vivos is a cornerstone in estate planning, taxation, and family law. By understanding the fundamental requirements and implications of such gifts, individuals can make informed decisions that fulfill their intentions while minimizing legal and tax complications. With proper planning and execution, gifts inter vivos can serve as a powerful tool for transferring wealth and providing for loved ones or charitable causes.