VocabuLaw

Inter Vivos Gift

What is it and what does it mean?

Description of the legal term Inter Vivos Gift:

An inter vivos gift is a voluntary transfer of property from one person to another made during the giver’s lifetime without consideration or payment in return. Under British law, it is distinguished from a testamentary gift, which is a transfer of property made through a will after the giver’s death. The term ‘inter vivos’ is Latin for ‘between the living’.

For an inter vivos gift to be legally binding, certain conditions must be met. First, the donor must have the intention to give (known as the ‘donative intent’), which means they must intend for the gift to be final and complete without any condition of return. This intent must be evident at the time of the gift. Secondly, there must be a delivery of the gift to the donee; this can be either actual physical delivery, symbolic delivery (such as the transfer of keys), or constructive delivery (where control is handed over though the item may not be moved physically). Thirdly, the donee must accept the gift – acceptance is often presumed, especially if the gift is valuable, but it can be rejected.

In addition to these requirements, when the property being gifted is land or real estate, the transfer must comply with formalities set out in law, usually involving written documents. The Property Law Act 1925 is the main piece of legislation governing the transfer of property in England and Wales, including mandatory registration for land and real estate gifts.

The concept is important in various contexts such as estate planning, tax considerations, and during marriage or civil partnership formations when couples may transfer property to each other. If an inter vivos gift fails to meet the requirements, it may not be recognized by the courts, and the property may revert to the donor’s estate upon their death, potentially leading to unintended inheritance tax implications.

One aspect of the usefulness of such gifts is the potential to reduce the value of a person’s estate for inheritance tax purposes. If a person survives seven years after making the gift, its value is generally not counted when calculating the value of the estate for taxation after their death. However, there are various exceptions and qualifications to this rule, and tax planning should always be approached with legal advice.

Legal context in which the term Inter Vivos Gift may be used:

Consider, for example, an elderly lady who wishes to gift her granddaughter her house. To do so, she must clearly indicate her intention to make the house an inter vivos gift, ensure all the proper legal documents are completed (including possible registration of the property in her granddaughter’s name), and that her granddaughter accepts the house. If all these elements are in place, the house will legally pass to her granddaughter immediately.

Another scenario might involve a wealthy individual who decides to give a substantial sum of money to a friend to support them starting a business. If he withdraws the money, hands it over, and clearly states it is a gift without any expectation of repayment or future benefits, he has made an inter vivos gift, and the money becomes the property of his friend from that moment forward.

In the British legal system, a clear understanding of the term and its application is essential for personal property transfers during one’s lifetime. The principle ensures clarity in transactions and assurances that gifts made during life are respected and enacted according to the donor’s wishes, thereby supporting the overarching aim of the law to facilitate autonomy and certainty in personal affairs.

This website is for informational purposes only and may contain inaccuracies. It should not be used as a substitute for professional legal advice.