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The Law of Gifts: No Strings Attached (For the Most Part)

The Law of Gifts: No Strings Attached (For the Most Part)

‘Tis the season of giving, and hopefully by now all the things you intend to give have been got. I know of some folks who not only have all of their shopping done, but also have everything wrapped already. Likewise, I know of some folks who still have some shopping or wrapping to do—or all of it. But did you know that how you fill out a gift tag may change the nature of your gift? And did you know that you may only have the authority to give half of certain gifts? Today, we’ll discuss these and a few other legal issues involving gifts.

First, let’s examine what it takes for a gift to be a gift. Essentially, a gift requires (1) donative intent, (2) delivery, and (3) acceptance. Now, let’s apply these elements to a typical Christmas gift-giving scenario: Let’s say you bought something from a retail store, then brought it home, wrapped it, and put a gift tag on it that says it’s from you and to your friend. I would say that this series of events has the donative intent element pretty well covered. Next, let’s say you either hand it to your friend or put it under their Christmas tree. Boom: delivery. Then, your friend unwraps it, smiles, says “thank you,” and gives you a hug. Ah, acceptance. So there you have it: a legally sufficient gift. Now let’s look at some of the other legal issues involving gifts.

Some gifts have only one giver (the donor) and only one recipient (the donee). However, some gifts may have more than one donor, donee, or both. Consider, for example, a gift given to a child from “Mom and Dad.” Or, as is especially common with wedding gifts, a gift given to the married couple. In Texas, being a community property state, gifts from married couples or to married couples can involve community property rights. A gift given to only one spouse would be considered the separate property of that spouse, but if the gift is given to both spouses, it would be considered community property. Also, if the gift being given is the community property of the donor, then the donative intent of both donor spouses must be present (no pun intended) or else the gift may either fail as a gift entirely or be a valid gift of only the participating donor’s one-half interest in the property.

Most gifts have no “strings” attached, and would potentially fail as a gift if there were any strings attached because either one or both of the donative intent and delivery elements would be incomplete. However, some gifts can be conditional. The classic example is an engagement ring, which is a gift given in contemplation of marriage. If the condition of marriage is not fulfilled, then the ring must be returned to the donor. Interestingly, because there is seldomly an explicit deadline to fulfil the condition (imagine someone getting down on one knee, presenting an engagement ring, and saying “will you marry me on or before the first anniversary of today’s date?”), a reasonable time is presumed to be imposed, and is usually presumed to have lapsed if the betrothed couple find themselves in court over the matter. Sometimes, if you give what you intend to be a gift but impose conditions that are incompatible with a valid gift, what you may have actually done is formed a contract with your intended donee, so all is not necessarily lost.

What happens if you want to give a gift, such as a large sum of money or an interest in real property, to someone who is not old enough to receive it? Many states, including Texas, have adopted what is commonly referred to as the “Uniform Transfers to Minors Act.” This Act essentially allows gifts to minors to be transferred to a custodian, who holds the gifted property in trust for the minor under the terms of the Act. In states or situations where the Uniform Transfers to Minors Act does not apply, gifts can nevertheless still be given in trust—in fact, virtually any gift can be given in trust, regardless of whether the donee is a minor or otherwise incapacitated person.

In addition to the matters discussed above, there can be tax consequences or benefits to certain gifts, but those matters are far too complicated to get into here.

You probably shouldn’t let anything discussed above worry you about the gifts you’re giving this year—there’s no need for you go and add names to the gift tags you’ve already written, or to scratch names off. The legal effects of gift giving usually only come into play for especially valuable gifts, whether in the monetary or sentimental sense, where there is sufficient motivation to fight over whether the gift was valid or from or to whom it was given. So, unless you’re giving a gift of such gravitas, you can rest your mind at ease, and have yourself a merry little Christmas now.

Byron L. Brown is an attorney with the Randle Law Office in Houston, Texas, where his practice areas include municipal economic development, municipal franchises and commercial lease litigation. He graduated from the University of Texas at San Antonio with a B.A. in Criminal Justice, and earned his J.D. from the University of Houston Law Center.

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