A gift is a voluntary irrevocable transfer of property from one person to another without consideration. The giver of the gift is the donor, while the receiver is the donee. In addition to being irrevocable, there are three additional elements that a gift must meet in order to be valid:
- The donor must intend to make a present gift of the property;
- The donor must actually deliver the property to the donee.
- The donee must accept the gift.
We will discuss these elements in turn.
The donor must intend to presently transfer title from himself or herself to the donee. Intent to transfer mere possession of the property is not sufficient. The donor must intend to transfer ownership. (Intent to transfer possession creates a bailment, which we will discuss later in the chapter.) In addition, a gift, to be valid, must be unconditional.
Please note that a promise to transfer ownership in the future is not a gift. A gift must transfer the interest in the property as soon as it is given. A promise to give a gift in the future is a contract, not a gift; and it will be unenforceable without consideration, like any other contract. As an aside, it is important to note that, unlike contracts, gifts do not need consideration to be binding. A properly executed gift is completely binding and irrevocable even in the complete absence of consideration.
As we mentioned before, to be valid, a gift must take effect presently at the time of the delivery. Thus, if A were to give a gift to B with the intent that the gift take effect three months from now, the gift is completely invalid. However, it is possible to give a present gift of a future interest. So, if A gave the gift now with the intent that B be allowed to take possession in three months, the gift could be valid. For Example:
Father has a painting in his house that he likes very much. For Son’s 21st birthday, Father tells Son that he is giving Son the painting, but that he is reserving the right to keep the painting in Father’s house until Father dies. Even though Son cannot take possession of the painting until Father dies, the gift is valid since he is now giving the rights to the painting to Son. It is a present gift of a future interest. See Gruen v. Gruen, 68 N.Y.2d 48 (1986).
The second requirement is that the donor must deliver the property to the donee. Delivery does not necessarily mean that the object must be handed over directly from the donor to the donee. All delivery means is that the donor must do an act that demonstrates an intent to transfer the property. There are several ways of doing this.
Of course, the physical handing over of the property to the donee is the simplest way to satisfy the delivery element. In scenarios where physically handing over the property is impractical, constructive delivery is allowed. Constructive delivery can be accomplished by handing over the means of obtaining ownership or by some sort of symbolic act relinquishing dominion and control over the property. For example:
- Sam buys Woody a 2003 Lexus for his birthday. It is obviously impossible for Sam to physically hand Woody the car. What he can do is hand Woody a key to the car which would qualify as constructive delivery.
- Father has a painting in his house that he likes very much. For Son’s 21st birthday, Father tells Son that he is giving Son the painting, but that he is reserving the right to keep the painting in Father’s house until Father dies. Father lives in New York City, but Son lives in Rochester, New York, which is over 300 miles away. Rather than drive up to Rochester to give Son the painting and then take it back home, Father writes a note to Son, explaining that he is giving Son the painting, but that Father is keeping the painting until he dies. In this case, the New York court allowed the note to serve as a “deed” for the painting; and the transfer of the letter was enough of a symbolic act to qualify as a delivery of the painting itself. See Gruen v. Gruen, 68 N.Y.2d 48 (1986).
This is also true for items like safe deposit boxes, trunks and safes. If any of these things are impractical to physically hand to the donee, the donor can instead hand over a key that opens the object and this would qualify as a constructive delivery.
It is also possible for a donor to give a gift to a donee through a third person. The third person is acting as the agent of one of the parties. The timing of the gift’s completion will depend on who the third person works for. If the third person is an agent of the donor, the gift does not take place until the agent actually delivers the property to the donee. However, if the agent represents the donee, the gift is effective as soon as the donor gives the property to the agent. For example:
- Fred wants to give Barney a pack of baseball cards. Fred calls in his agent Kazoo to deliver the cards. Fred hands Kazoo the cards and tells him to deliver them to Barney. Before Kazoo reaches Barney, Fred calls Kazoo on his cell phone and tells him to bring the cards back. When Barney hears about this, he sues Fred for the cards. In this case Barney will lose because Kazoo was Fred’s agent. Therefore, the gift is not complete until the cards are actually delivered to Barney. Thus, even though gifts are generally irrevocable, Fred can take the gift back because the gift was never completed.
- Fred wants to give a pack of baseball cards to Barney. Barney calls Kazoo and asks Kazoo to pick up the cards for him. Kazoo goes to Fred and tells Fred that Barney sent him to pick up Barney’s cards. Fred gives Kazoo the cards. Fred then calls Kazoo before he has delivered the cards and asks for them back. Kazoo refuses. If Fred sues to recover the cards, he will lose. Since Kazoo was an agent of the donee, the gift is considered complete as soon as the donor gives the property to the donee’s agent. In this case, the gift was completed as soon as Fred gave the cards to Kazoo.
The third element necessary for a gift to be complete is that the donee must accept the gift. This is the easiest element to establish because, as long as the gift benefits the donee, acceptance will be presumed once there is a delivery. This presumption can be overcome by showing that the donee rejected the gift. In addition, a third party can accept the gift on behalf of a donee even without the donee’s knowledge, if the gift would benefit the donee. This acceptance can later be negated if the donee rejects the gift when he or she finds out about it.
Everything we have discussed in this section applies to gifts between living people, or “inter-vivos” gifts. The words “inter-vivos” are Latin for “between living people.” The term “inter-vivos gift” is a slight misnomer because, in fact, all gifts must be between living people. Even the gift causa mortis, which is the subject of the next section, must be between living people to be valid. The only exception to this rule is a gift made through a Will, which takes effect after the death of the donor. A Will requires certain formalities, and the subject of complying with those formalities will be taken up in the course of Wills, Trusts and Estates. Other than gifts made in Wills, all gifts must be made by a living person to a living person. For example: