Inter Vivos Gifts under Trusts and Estates
Inter Vivos Gifts
(Latin: "Between the living")
Definition
An Inter Vivos Gift is a voluntary transfer of property or asset made by a living person (the donor) to another living person (the donee) without consideration (payment or compensation). It is effective immediately upon delivery, as opposed to a testamentary gift which takes effect after the donor’s death.
Context in Trusts and Estates
Inter vivos gifts are an important way of transferring property during a person’s lifetime.
They are distinct from testamentary gifts which are made through a will and take effect only upon death.
Inter vivos gifts can sometimes affect estate planning, especially if the donor passes away shortly after making a gift.
Courts examine whether an inter vivos gift was actually made to prevent disputes over ownership.
Essential Elements of an Inter Vivos Gift
To be valid and enforceable, an inter vivos gift must satisfy three elements:
1. Intent
The donor must have a clear intention to make an immediate and irrevocable transfer of ownership.
Mere promise or intention to gift in the future is not enough.
2. Delivery
The donor must deliver the gift to the donee or to someone on the donee’s behalf.
Delivery can be actual (handing over the item) or constructive (handing over something that symbolizes control, like keys to a car or title documents).
Symbolic delivery is also accepted when actual delivery is impossible (e.g., handing over a written document symbolizing ownership).
3. Acceptance
The donee must accept the gift.
Acceptance is generally presumed if the gift is beneficial.
Types of Delivery
| Type | Explanation | Example |
|---|---|---|
| Actual Delivery | Physical transfer of the item itself | Handing over a watch |
| Constructive Delivery | Transfer of control or means of possession | Handing over car keys |
| Symbolic Delivery | Transfer of something representing the gift | Giving a written document of ownership |
Distinction from Testamentary Gifts
| Aspect | Inter Vivos Gift | Testamentary Gift |
|---|---|---|
| Effective Date | Immediately upon delivery | Upon death of donor |
| Revocability | Generally irrevocable once delivered | Can be revoked before death |
| Formalities | No formalities required (except for some property) | Usually requires formal will process |
Relevant Case Law
1. Milroy v. Lord (1862) 4 De G. & J. 264 (UK)
Facts: Donor tried to make an inter vivos gift by transferring shares but did not complete the transfer formally.
Held: The gift was ineffective because the donor had not done everything necessary to transfer ownership.
Significance: Established that an inter vivos gift requires complete and effective transfer of property at the time of gift. Mere intention is not enough.
2. Re Rose [1952] Ch 499 (UK)
Facts: Donor executed share transfer forms and sent them to the company, but the registration was not completed until later.
Held: The gift was effective because the donor had done everything in their power to transfer ownership.
Significance: Relaxed the rule from Milroy v. Lord by recognizing gifts valid if the donor has done all that is possible.
3. Thomas v. Times Book Co. (1966) 1 WLR 911
Facts: Donor delivered a watch as a gift.
Held: Actual delivery was necessary to complete the gift.
Significance: Reinforces the importance of delivery in the gift process.
4. Gruen v. Gruen, 68 N.Y.2d 48 (1986) (US)
Facts: Father gifted a painting to his son but retained possession until his death.
Held: The court recognized the gift because the father had delivered constructive possession (a letter of gift and documentation).
Significance: Constructive delivery of the right to possession can suffice in inter vivos gifts.
Practical Importance in Estates
Inter vivos gifts reduce the size of the donor’s estate upon death.
If not properly documented or completed, inter vivos gifts may lead to family disputes or challenges during probate.
Gifts made shortly before death might be scrutinized for intent and validity.
Summary
| Element | Description |
|---|---|
| Intent | Clear and present intention to gift immediately |
| Delivery | Physical, constructive, or symbolic transfer |
| Acceptance | Donee’s acceptance of the gift |
An inter vivos gift is an immediate and irrevocable transfer of ownership from donor to donee, distinguished by the need for clear intent, delivery, and acceptance.
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