Gifting Can Turn to Bah Humbug

It’s Christmas time. It’s Hannukah time. Gifts are the order of the day but sometimes things go awry. What happens then? Who gets the present when there is a falling out between giver and recipient?

The first thing to consider is the legal definition of a gift in Florida. A valid lifetime gift requires (a) present donative intent; (b) delivery, which can be actual or constructive; and (c) acceptance by the recipient. Argument about whether a gift is complete often involves gifting or attempted gifting just before someone dies. Sullivan v. AT&Tis a good example.

Anna Sullivan had a son named Thomas E. Sullivan and a grandson named Thomas E. Sullivan, Jr. Her AT&T stock was in joint names with Thomas E. Sullivan. Shortly before she died, she went to live with her grandson and asked the grandson to retrieve her AT&T stock from her safe deposit box. After the grandson got the certificates, Anna purportedly told the grandson that she originally wanted her son to own the AT&T stock after she died but had changed her mind and wanted the grandson to own it.

Anna died and a few days later the grandson took the certificates to a brokerage firm and sold it (after all, he was Thomas E. Sullivan). When Anna’s son found out about the sale, he filed suit against AT&T and the brokerage firm demanding stock or an amount equal to the proceeds from sale (apparently his son blew through the money so suing his son would be a waste of time). 

The court ruled that Anna did not complete a gift of stock to her son while she was alive but only intended to make a gift. The court explained that registering the stock in joint name with her son created a presumption of a gift, but the presumption was not conclusive and could be rebutted. The court went on to explain it appeared Anna also intended to make a gift to her grandson but did nothing to affect that gift. AT&T and the brokerage firm were off the hook. But the case certainly calls into question putting someone’s name on a stock certificate as a joint owner instead of in a Will or trust as a way to avoid probate.

What about a Christmas present? If all that exists is donative intent, there is no completed gift and it can be revoked at any time. In many cases, the gift is under the  Christmas tree. Is that sufficient? Let’s check off the gift boxes (pun intended).

Was there donative intent when the gift was placed under the tree? Probably, so that element is likely met. Is placing it under the tree delivery? Delivery can be constructive or symbolic as well as actual. Symbolic delivery would be giving something that represents the gift, such as keys to a car. There is no clear rule on whether placing a gift under the Christmas tree is sufficient delivery so the facts and circumstances would have to be argued. Most likely, intent and placement under the tree would have to be simultaneous.

What about acceptance? Delivery alone is not enough. Does the intended recipient of a Christmas present accept the present at the time it is placed under the tree or at the time it is opened? If the gift was not to be completed until it was opened on Christmas, it probably could be taken back at any time.

Maybe the result would be different if the gift was something promised by the donor, as when grandparents tell a grandchild they are going to give the grandchild a new computer for Christmas. The grandchild is counting on a new computer but gets a DUI after which the grandparents want to take back that unopened computer present before the grandchild gets out of jail.

Good news for the grandparents is that a promise to make a gift is not a legally enforceable contract. The grandchild gave nothing in return and as long as the gift is not completed it can be revoked at any time.

There  may be a different result if the grandparents had told the grandchild years ago that if the grandchild agreed not to drink alcohol until turning 21, they would give the grandchild a new computer on Christmas following that 21^st birthday. The grandchild did not drink alcohol. The grandchild performed, which could be acceptance of the grandparent’s offer.

Good news for the grandparents is a promise to make a gift based upon the grandchild not drinking alcohol is probably still a promise to make a gift, unsupported by consideration, and is not legally enforceable. That would not stop the grandchild from filing suit, especially if the promised gift was something more valuable.

An engagement ring in Florida is a conditional gift, given in contemplation of marriage. If the marriage is called off, the person giving the ring usually gets it back. A different result can prevail if it can be shown the ring was given unconditionally as an outright gift. That might be the case if the ring was given as a Christmas present. Those considering giving an engagement ring at Christmas might want to make it clear the ring is for engagement and not a Christmas gift.

Lawsuits about gifts carry a lot of emotional baggage, which means the participants are often willing to spend a lot on attorney fees. Attorney’s fees can quickly exceed the amount in dispute. Attorney fees are not recoverable by the winner in most cases over gifts. That means in most of these cases, the parties should do everything they can to avoid court.

William G. Morris is the principal of William G. Morris, P.A. William G. Morris and his firm have represented clients in Collier County for over 30 years. His practice includes litigation and divorce, business law, estate planning, associations and real estate. The information in this column is general in nature and not intended as legal advice.