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Beware Of Geeks Bearing Gifts: The Law Of Inter Vivos Gifts And How Not To Get Burned

The law recognizes several different kinds of gifts. An inter vivos gift is a gift that I make while I'm still alive, not planning on dying any time soon, and that takes effect immediately (instead of after I die). An inter vivos gift must also be unconditional and irrevocable. In order for it to be enforceable, I must intend it as a gift, I must actually deliver the gift, and the recipient must actually accept it. This can result in some fairly non-intuitive consequences:

(1) I promise my son: "If you'll get an A in Calculus next semester, I'll give you $10,000." My son gets an A in Calculus and I refuse to give him the money. Normally there would be nothing he could do, because most of the time a "gratuitous promise" is not enforceable. But if I obtained some benefit from him getting an A in Calculus (no matter how small), a court might treat it as a contract rather than a gift and I would owe him $10,000.

(2) My son gets an A in Calculus, I mail him a check for $10,000, and before he checks his mail I discover that he's been using drugs. I stop payment on the check because I know exactly where the money's gonna go. In this case I probably can keep the $10,000 - not because he's been using drugs, but because he hadn't opened the envelope with the check in it yet (thus there has been no "acceptance").

(3) Suppose he gets an A, I mail him the check, he opens the letter, cashes some of it, and buys drugs with it. It's too late, I'm out $10,000 because the gift has been completed and the money is his now.

Consider also that "delivery" of a gift can mean something less than physical transfer of the item given. Delivery of the keys to a car, the title to a house, or the keys to a safe deposit box are seen as effectively the same things as physical delivery of the item itself if they trasfer exclusive control to the receipient of the gift. If I transfer non-exclusive control (for example, an ATM card for a joint bank account that I still use, the situation can get trickier.

DISCLAIMER: The following is intended for reference only and is not intended as legal advice.

Submitted by:

Bob Miles

Real Estate Law in Plain English explains real estate law without the legalese.


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