Nature of Gift
A gift is a transfer of property gratuitously. It is usually contrasted with a bequest or legacy under a will in that the donor is still alive. In certain cases where the donor makes, transfers property in expectation of death, it is treated for tax and certain other purposes as given on death.
A gift involves the intention of the asset to be transferred with the intention that the donee retains the thing without any obligation to restore it or undo the transfer.
Gifts may be given where the property is transferred according to its nature. Be that property requires transfer by the way of conveyance or equivalent assurance. Ownership of movable property may transfer by delivery. A declaration of trust may constitute a gift.
Every person who has legal capacity may dispose of his assets by gift or any right in them to which he is absolutely entitled. He has the power to make a legal binding transfer.
A gift requires giving and taking. The donor must have the legal competence to transfer the asset and the donee must be competent to receive what is intended to be given. Where the asset is restored after an alleged and disputed gift, the gift is ended.
Movable and Immovable Property
Generally, all types of property may be subject to a gift. Certain types of property are unalienable at common law or by statute. This includes titles of honours, dignity and certain payments from public sources.
A gift of property, real property is referred to as a voluntary conveyance. The rules applicable to deeds apply. A gift of real property must be perfected by deed as equity will not generally aid a volunteer.
Movable property can be transferred between persons by delivery. Delivery must be accompanied by must the intention to pass ownership.
Interests cannot be created directly in goods. However, limited interest and rights may exist under a trust. In this case, the rights under the trust are a chose in action.
There is no property in a dead body so that a person may not will it to a third person. He may, however, make the requests which may be taken into account by his beneficiaries and successors
A gift need not be expressly accepted. It is presumed from silence, even if the donee is not aware of the gift. This is also the case where it is onerous in nature.
A gift once given cannot be revoked even if before it comes to the donee’s knowledge. A gift once given cannot be taken back if it is absolute.
A person cannot be compelled to take that which he does not wish to accept. A donee may repudiate or disclaim a gift on becoming aware of it. This may relieve him of burdens associated with the gift.
Gifts are subject to capital acquisitions tax, in the same way as an inheritance. In the United Kingdom, a gratuitous donation of property or assets is not subject to tax as a general rule, if the donor survives for seven years.
If the donor does not so survive, it may be transferred subject to the Inheritance Act’s regime. Similarly, certain trusts and assets which have the effect of depriving the donor of his assets may be subject to the regime as lifetime chargeable transfer.
Income tax may arise on certain gifts. Gifts from employers or associated parties may be subject to income tax and PAYE obligations. Other regular receipts may be subject to income tax in the hands of the donee as such.
Gifts as between spouses are exempted from gift tax. Formerly, there were legal impediments to transfer of assets between spouses. And they have long since been removed. It is presumed that a transfer of assets between husband and wife and vice versa intended as a gift.