Gifts

Contact: Rebecca Tushnet

Rules about transferring property are created by law. There are only certain ways people can rearrange property relations. Some rearrangements happen even if the people involved don’t want them, and some don’t happen even if the people involved do want them. Knowing the rules is a way to understand which transfers work and why.

There are several methods of transferring property. The key voluntary methods are gifts, sales, and transfers at death, which can be divided into transfers by will (also known as transfer by devise) and transfers by operation of law because of the decedent’s intestacy (dying without a will). Although most litigated transfers involve sales, it is useful to study gifts in order to appreciate the significance of possession to ownership. Relatedly, gift law highlights that some problems in contract law arise only out of executory promises: completed promises involving property will often be valid as gifts, even if they lacked consideration. Gift law also provides an introduction to methods of transferring land, particularly transfers by deed and transfers by will.

In order for a valid gift to occur, three elements must be present: (1) the donor must intend to give the property as a gift; (2) the donor must deliver the property to the donee; and (3) the donee must accept the gift. We won’t spend much time on the third element, because when the property has some value, acceptance will generally be presumed in the absence of an explicit rejection.

Unlike a sale or a contract, a gift does not require consideration. This leads to concerns that often shape judicial doctrine. First, without tangible consideration, we need to keep people from lying about what was given to them. Because gift issues often arise after the alleged donor died, courts have been concerned to protect the donor’s heirs from having the donor’s estate stripped by people who claim to be donees.

Second and relatedly, we desire to protect the system of written wills and to encourage its use. A standard will must be signed and witnessed. A system that easily allows pre-mortem gifts might undermine people’s incentives to take the time to write a will – they might think they can always just give their property away when death approaches – and also harm the legitimate expectations of those who are named in a will. If the person who writes a will, known as the testator, identifies specific property in her will, but sells it or gives it away before she dies, the devise in the will is nullified; it’s no longer her property to give away when she dies. Although people named as devisees in a will have no legal rights to the property before the testator dies, they might nonetheless have practically and morally compelling expectations – especially if we worry about the people surrounding a dying person exercising undue influence and extracting gifts that the dying person wouldn’t give if she were thinking more clearly. Thus, by making it more difficult to give gifts, we may protect the overall system of property transfers. This concern can lead courts to find that no gift has been made even when the would-be donor very clearly wanted to give the property away. Consider as you read whether this overall structural concern is justified.