Gift-giving is a custom many individuals across various cultures and societies are familiar with. Whether at birthdays, Christmas, or sporadic moments throughout the calendar year, tangible and intangible items are transferred from one person to another without the expectation of payment in return. Although it is a joyous event, the custom can encounter contentious legal issues when disputes concerning gift ownership arise. To avoid this prospect, the creation of a Deed of Gift can provide clarity.
Definition of a Deed of Gift
A Deed of Gift is a legal document recording the voluntary transfer of property from one person to another, without the donor requesting payment in exchange. For the Deed to be legally binding, the donor and donee must sign the document in the presence of a disinterested witness. A Deed of Gift is effective in eliminating doubt and misunderstanding of the ownership rights in the property. It acts as proof of transfer and the donor’s intentions, which cannot be revoked unless agreed by the parties.
Importance of Property Type
Deeds of Gifts can be used for various properties, however different types of gifts can create further legal requirements for a transfer to be recognised by law. The gift of property (real estate), cash, objects, and shares each have a crucial distinction, which is explained below.
The gifting of property must further be completed by registration at the Land Registry. This may be through the signing of a land registry form (for unregistered land) or completing typical TR1 or TR5 forms (for registered land).
In most cases, the gifting of cash (Monetary Deed of Gift) is made through bank transfer. After signing the Deed of Gift, the donor typically instructs the bank to electronically transfer the cash gift to the donee’s account. The transfer is not legally completed until the cash gift has been deposited in the donee’s account, as the donor can revoke transfer before then.
Gifting objects such as jewellery, art, furniture, and cars may require particular documentation specifically relating to the gift object to be signed off and transferred. For example, the legal gifting of a car requires the donor to complete sections 6 and 8 of the Vehicle Logbook (V5C), notifying DVLA of the donee’s details.
Gifting shares will also require the donor to complete a stock transfer form. This form must be sent alongside the share certificate to the share registrar, in order for the donee to be legally recognised as the owner of the shares.
Conclusion
However, it is important to note that unless exempted, if the donor dies within 7 years of making a gift, and the gift exceeds the Inheritance Tax threshold, Inheritance Tax must be paid on the value of the gift by the donee.
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The contents of this article do not constitute legal advice and are provided for general information purposes only.
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