A previous blogger discussed the capacity to marry, another area of capacity is the capacity to make a gift. For a gift to be valid there must be the following:
- the donor must have the intention to make a gift;
- there must be acceptance of the gift; and
- there must be delivery of the gift.
The donor’s capacity to make a gift is typically seen as the same that is needed to enter into a contract. There must be the ability to understand the nature and effect of the transaction. However, the degree of understanding which the donor must possess varies with the circumstances of the case, and that in certain circumstances the requirement of testamentary capacity must be met.
The biggest issue, especially for litigators in this practice area, is that questions about the gift arise after the person’s death and it is usually impossible to have solid evidence (one way or the other) of the donor’s intentions or capacity, with any certainty, at the time the gift was made.
Lesson Learned: If you intend to make a gift, as with anything else, put it in writing. If the gift is out of the ordinary or of a significant value the prudent course of action is to record the gift with an explanation and inform those close to you, those who may have issue with it and your advisors.
Until next time