Description of the legal term Gift Over:
Gift over is a term used in British property law that refers to a stipulation in a legal document such as a will or trust, that provides for the distribution of property to a secondary beneficiary under certain conditions. This legal mechanism is commonly associated with the making of contingent gifts, where the primary beneficiary must meet specific requirements or conditions before they can take possession of the gift. If the primary beneficiary fails to meet these conditions, the property will “gift over” to the secondary beneficiary.
This principle is typically found within the broader concept of a contingency or conditional gift in wills and trusts. For instance, a parent might leave a property in their will to their child, but with a condition that the child must graduate from college before taking ownership. If the child does not satisfy this condition, the “gift over” clause will then direct the property to another named beneficiary.
The rules concerning gift over provisions need to be drafted with precision to ensure that the testator’s or settlor’s intentions are clearly understood and can be effectively carried out. There are strict requirements for certainty that must be adhered to so as not to render the gift void. The three certainties that must be met are certainty of intention, certainty of subject matter, and certainty of objects. If any of these are unclear, it may give rise to legal disputes and potential litigation, as courts attempt to determine the intentions of the person who created the will or trust.
The term also appears within the rule against perpetuities, which is a legal doctrine that restricts the length of time over which a gift can be controlled after the giver’s death. The rule aims to prevent the indefinite control of property and applies to gift over provisions by requiring that the contingent event must occur within a certain period, typically within the “lives in being plus twenty-one years”.
The concept of gift over is crucial in estate planning and ensuring that assets are distributed according to the specific wishes of the individual. It also presents a way to provide for alternate distribution of assets in the case of unforeseen circumstances, such as the death or incapacity of the primary beneficiary.
Legal context in which the term Gift Over may be used:
Consider a will in which a grandmother stipulates that her granddaughter shall receive a gift of £10,000 when she turns 21. However, the will includes a gift over provision stating that if the granddaughter does not live to reach the age of 21, the money shall instead go to a charity that the grandmother supported during her lifetime. Here the gift over acts as a secondary directive, ensuring that the grandmother’s assets are distributed according to her wishes, even if the primary condition (the granddaughter reaching 21) is not met.
Another instance might involve a trust where a settlor places shares in a family business into a trust for the benefit of his nephew, but only if the nephew joins the family business by a certain age. The trust includes a provision that if the nephew chooses not to join the family business or fails to do so by the required age, the shares will gift over to other family members actively involved in the business. This ensures that control and economic benefit of the business remain within the hands of those who are actually contributing to its operation, aligning with the settlor’s intentions.
The concept of gift over plays an essential role in British jurisprudence, as it allows for both the flexibility and precision required in the management and disposition of an individual’s estate after death. It ensures that assets are not left in uncertainty should the original terms of a will or trust become impossible or impractical to fulfill, thereby protecting both the property’s value and the original intentions of the person who has passed away.