This article discusses the legal requirements for an ordinary gift: donor competence, donor intent, donor delivery, donee acceptance, and appropriate documentation, if necessary.
First, an ordinary gift requires a competent donor. The donor cannot, for example, be under guardianship. Second and third, an ordinary gift requires the donor’s intent to have the gift property (or an appropriate document representing the gift property) transferred to the donee. The actual process of transfer is known as delivery. Fourth, an ordinary gift requires that the donee agree to receive the gift property. This act of receipt is known as acceptance. Fifth, an ordinary gift may require appropriate documentation.
The documents required for a gift, if any, depend on what kind of property is transferred.
As a general rule, no documents are required to give tangible personal property. Where there is no documentation of a gift, however, disputes can easily arise. A gift documented by a writing is difficult to challenge. Any documentation will help. Thus, a donor may want to make a formal writing known as a “Declaration of Gift.” A donee may want to make an informal writing such as a simple “thank you” note to the donee.
As an exception to the general rule, the law sometimes requires certain gifts of tangible personal property to be in writing. For example, most states have certificate of title laws. Under a certificate of title law, the only proof of ownership of a car, boat, or other vehicle is its certificate of title. It is not sufficient to just give the someone the keys. Thus, the gift requires notarization of the certificate of title and transfer at the appropriate government agency.
A gift of intangible property requires the transfer of a document that represents the intangible property. Intangible property includes, among other things, bank accounts, stock, copyrights, patents, trademarks, and royalties. Intangible property is often represented by documents with appropriate serial numbers. U.S. patents, for example, are numbered. Each patent has a serial number (e.g., U.S. Patent No. 6,438,932).
There are many kinds of documents that represent full or partial ownership in real property. For example, full ownership in real property is usually represented by a document known as a deed.
It is wise to consult your lawyer before making a substantial gift. Your lawyer can help you evaluate the wisdom of making the gift from all points of view, including any tax law implications. Your lawyer can help you make sure that the gift is appropriately documented.