Gifts

Question 1

What is the effect of a valid gift?

Answer 1

A valid gift passes title.

Question 2

What are the two kinds of gifts?

Answer 2

1. Gifts inter-vivos (made during the lifetime)
2. Gifts causa mortis (made in contemplation of death)

Question 3

What are the three requirements for gifts inter-vivos?

Answer 3

1. Donative intent
2. A valid delivery
3. A valid acceptance

Question 4

What does donative intent mean? When is it easy to establish?

Answer 4

Donative intent means the intent to pass title now. The intent is not to pass possession, but tht intent to pass title.

Donative intent is much easier to find when the donor and donee are closely related.

Question 5

You own a valuable painting and you want to give it to a local art museum. You write them a letter giving them title to the painting, but in the letter you ask that you be allowed to keep the painting in your living room until you die. Is there donative intent for a gift today, even though the painting hasn’t gone anywhere?

Answer 5

Yes, because the intent is to pass title now, and that is enough intent for a valid gift, even though possession by the museum won’t come until later.

Question 6

When is there a valid accpetance of a gift inter vivos?

Answer 6

Acceptance is implied by silence. The only way there is no acceptance is if you have explicit rejection, by words or deeds.

Question 7

For a gift inter-vivos, how is the delivery requirement satisfied?

Answer 7

It may be satisfied on the facts:

1. Handing something to someone clearly is valid.
2. Where the donee is already in possession of the item when the gift is attempted.
3. Where the donor hands over something that is representative of the object of the gift.

Some nit-picky situations on delivery:

• Donor makes out a check to donee or a promissory note to donee and gives it to donee. Here, no delivery until the check is cashed or until the note is paid.
• Donor hands donee a check or note made out to donor by a third party. This is a valid delivery even if donor has not endorsed the check or note to donee.
• Donor hands donee a stock certificate, representing shares in a corporation. This is a valid delivery even if the donor has not signed or endorsed the stock over to the donee nor has told the corporation of the transfer.
• When the donor uses a middle person to get the gift to the donee.
  
  • If the middle person is donee’s agent, then there is a valid delivery when donor hands the item to that middle person.
  • If the middle person is donor’s agent, then the delivery will not be good until the middle person hands it over to the donee.

Question 8

When the donor uses a middle person to get the gift to the donee, what if the facts are not clear whose agent the middle person was, the donor’s or the donee’s? Are there any exceptions?

Answer 8

When in doubt, construe the middle person to be the donor’s agent, which of course means that the delivery requirement is not satisfied until the middle person hands it over to the donee.

Exception: if the donee is a minor then, when in doubt, construe the middle person to be the donee’s agent.

Question 9

Donor hands donee a stock certificate, representing shares in a corporation. Is this a valid delivery?

Answer 9

This is a valid delivery even if the donor has not signed or endorsed the stock over to the donee nor has told the corporation of the transfer.

Question 10

Donor makes out a check to donee or a promissory note to donee and gives it to donee. When is delivery valid?

Answer 10

Here, no delivery until the check is cashed or until the note is paid.

Question 11

Donor hands donee a check or note made out to donor by a third party. Is this valid delivery?

Answer 11

This is a valid delivery even if donor has not endorsed the check or note to donee.

Question 12

What is the rule regarding delivery when the donor uses a middle person to get the gift to the donee?

Answer 12

• If the middle person is donee’s agent, then there is a valid delivery when donor hands the item to that middle person.
• If the middle person is donor’s agent, then the delivery will not be good until the middle person hands it over to the donee.

Question 13

In a personal property cases, when does the gifts causa mortis rule apply? Who does the rule protect?

Answer 13

These rules are special rules that apply to situations where the donor makes the gift thinking donor is about to die; they are in addition to the usual rules for gifts intervivos.

These rules are to protect donors who make gifts in these stressful situations.

Question 14

For gifts causa mortis, what is the test?

Answer 14

(1) what kind of peril must donor be contemplating to
support a gift causa mortis?; what is the danger faced?

• No gift causa mortis will be allowed unless the donor making the gift is facing a grave peril.
  (2) How is a fift causa mortis revoked?

Question 15

To have a valid gift causa mortis, what is the rule regarding the nature of the peril?

Answer 15

To have a valid gift causa mortis the peril the donor faces must be a fair degree of certainty or likelihood of death that is imminent and likely to occur.

Question 16

What are the three ways a gift causa mortis can be revoked?

Answer 16

1. Donor can, at any time, simply
   revoke. (voluntary revocation)
2. Donee predeceases donor
3. Donor recovers. Gifts causa mortis only valid if donor actually dies…wa. waah.

One situation that used to cause a revocation of a gift causa mortis, but does not any more: where donor dies from something other than the peril that prompted the gift.

Question 17

Donor is in the hospital with a terminal illness. Before the illness can do its work, the donor dies from food poisoning contracted from the hospital food. Is the gift causa mortis revoked because donor did not die of the
terminal illness that prompted the gift?

Answer 17

No, so long as the donor dies we don’t care what caused the death.

Question 18

Donor is in the hospital with a terminal illness. Before the illness can do its work, the donor dies from food poisoning contracted from the hospital food. Is the gift causa mortis revoked because donor did not die of the terminal illness that prompted the gift?

Answer 18

No, so long as the donor dies we don’t care what caused the death.

Question 19

Sam Salesman had worked for years selling heavy earth moving equipment in Texas. He was recently promoted to national sales manager and was required to fly around the country visiting sales offices. He hated flying, and especially hated flying Sardine Airlines, which not only had small, overcrowded planes, but had the
worst safety record in the industry. On a recent trip to the West Coast he was forced to fly Sardine because all other airlines were booked on the route. He was terrified. On the thought that he might land considerably short of his destination he gave his best friend the watch he had inherited from his father. Is the peril Sam is in enough to support a gift causa mortis?

Answer 19

No, because the peril he faces is NOT a fair degree of certainty or likelihood of death that is imminent and likely to occur.

Question 20

Does lying on the curb after having been hit by a bus support a gift causa mortis?

Answer 20

That would support a gift causa mortis.

Question 21

Does being in a hospital with a terminal illness support a gift causa mortis?

Answer 21

Yes. That would support a gift causa mortis.

Question 22

Aunt Lou wanted her niece Mary Sue to have all her stock in IBM. In the living room of her house, Aunt Lou handed Mary Sue the stock certificate for 1000 shares of IBM common stock. The certificate showed the 1000 shares registered to Louisa Mae Pfeffenwaffer, and gave her address. Aunt Lou did not sign the shares over to Mary Lou, and did not notify IBM that the share ownership had changed. Was that a valid delivery?

Answer 22

Yes, even though the donor had not endorsed the stock over to the donee nor told the coporation of the transfer.

Question 23

Donor writes a check to donee on donor’s checking account, or donor makes out a promissory note to donee. Donor then hands donee the check or the note.
Is that a valid delivery?

Answer 23

No, not until the check is cashed or until the note is paid.

Question 24

If donor does not give donor’s check or note, but donor hands donee someone else’s check or note that was made out to donor, is that a valid delivery?

Answer 24

Yes, and the delivery requirement is satisfied even if donor has not endorsed the check or the note.

Question 25

Grandma wanted to give each of her grandchildren money. She called all five into her living room and with great ceremony handed each a passbook to a
savings account, each containing $10,000.
Is the handing over of the passbooks a valid delivery of the money in the accounts?

Answer 25

Yes, the passbook is a valid delivery (representaive) of the money in the account.

Question 26

Last week you borrowed my lawnmower. Today I bought a new riding mower and called you up and said, “Hey, today I bought a fancy new riding mower and you can just keep the old one.” A valid delivery?

Answer 26

Yes, since the donee was in possession when the gift was attempted.