Also known as: lifetime gifts · inter vivos gift
Written by attorneys — see sources below.
A voluntary transfer of property made by a donor to a donee without consideration during the donor's lifetime. The transfer takes effect immediately and requires delivery with intent to pass title.
Laura Lewis executed a will leaving her vacation home to her niece Leah Lamb. Two years later Laura transferred the home to Leah by deed and wrote a note stating the transfer should count against the devise. After Laura's death the personal representative treated the transfer as satisfying the devise in full because the contemporaneous writing linked the lifetime gift to the testamentary disposition.
Lars Lindstrom transferred appreciated securities to his daughter Lillian Locke during his lifetime. The IRS later assessed tax on the income generated by the securities after the transfer. The court treated the transaction as a completed lifetime gift that shifted ownership and any future income tax consequences to the donee.
In June 1958, the American Brewery, Inc., in cooperation with Maryland state game officials, placed a tagged rock fish named Diamond Jim III into the Chesapeake Bay as part of its Third Annual American Beer Fishing Derby. The contest rules provided that the person who caught Diamond Jim III and presented the identification tag along with an affidavit confirming capture by hook and line would receive a $25,000 cash prize. The brewery also placed other tagged fish carrying smaller prizes in the bay. On the morning of August 6, 1958, William Simmons caught Diamond Jim III while fishing in the Chesapeake Bay. Although Simmons was aware of the fishing derby, he had not set out specifically to catch the prize fish. After realizing the significance of the tag, Simmons complied with the contest requirements and, during a television appearance arranged by the brewery, received the $25,000 prize. The Internal Revenue Service determined that the prize constituted taxable gross income and assessed a deficiency of $5,230 against Simmons. Simmons paid the tax and filed a claim for refund. After receiving a partial refund based on deductions, Simmons brought suit in the United States District Court for the District of Maryland seeking a full refund of the tax paid on the prize. In the district court, Simmons contended that the prize was not includible in gross income or, alternatively, that it qualified for exclusion under section 74(b) for prizes and awards or section 102 for gifts, and that taxing it would violate the Constitution. The district court granted summary judgment in favor of the Government. Simmons then appealed to the United States Court of Appeals for the Fourth Circuit.
View caseLattice Systems made a substantial cash transfer to its principal's spouse shortly before filing for bankruptcy. The trustee argued the transfer was a fraudulent lifetime gift that depleted estate assets. The court examined whether the bankruptcy judge had authority to adjudicate the avoidance claim arising from the pre-petition transfer.
Vickie Lynn Marshall married J. Howard Marshall II, Pierce Marshall’s father, approximately one year before J. Howard’s death. Shortly before J. Howard died, Vickie filed suit against Pierce in Texas state probate court asserting that Pierce had tortiously interfered with a gift J. Howard intended to provide her through a trust. After J. Howard’s death, Vickie filed a petition for bankruptcy in the United States Bankruptcy Court for the Central District of California. Pierce filed a proof of claim in the bankruptcy proceeding asserting a defamation claim against Vickie’s estate arising from statements made to the press by Vickie’s lawyers accusing him of fraud in controlling his father’s assets. Vickie responded by filing a counterclaim for tortious interference with the expected gift from J. Howard. On November 5, 1999, the Bankruptcy Court granted Vickie summary judgment on Pierce’s defamation claim. After a bench trial, on September 27, 2000, the Bankruptcy Court entered judgment for Vickie on her counterclaim and later awarded her over $400 million in compensatory damages and $25 million in punitive damages. The District Court concluded that Vickie’s counterclaim was not a core proceeding under 28 U.S.C. §157(b)(2)(C) and therefore treated the Bankruptcy Court’s judgment as proposed findings of fact and conclusions of law. The District Court conducted an independent review of the record. It declined to give preclusive effect to a Texas state court judgment that had been entered in Pierce’s favor. The District Court awarded Vickie compensatory and punitive damages, each in the amount of $44,292,767.33. The Court of Appeals for the Ninth Circuit reversed. It held that the Bankruptcy Court lacked authority to enter final judgment on Vickie’s counterclaim because the counterclaim was not so closely related to Pierce’s proof of claim that its resolution was necessary to resolve the allowance or disallowance of that claim. This holding made the Texas probate court judgment the earliest final judgment, which the Court of Appeals held the District Court should have afforded preclusive effect. The Supreme Court granted certiorari.
View caseA lifetime gift to a devisee or the devisee's family adeems the devise by satisfaction when the testator provides a contemporaneous writing or the devisee acknowledges in writing that the gift operates as satisfaction.
Supporting sources
The decedent must declare in a contemporaneous writing or the heir must acknowledge in writing that the gift is an advancement or is to be taken into account in distributing the estate.
Supporting sources
A donor making an irrevocable lifetime gift must possess the capacity to make or revoke a will plus the ability to understand the gift's effect on the donor's future financial security and that of any dependents.
Supporting sources
Engagement gifts are often viewed as conditional lifetime gifts given in contemplation of marriage. When the marriage does not occur the donor may recover the property because the condition failed.
Supporting sources