What is a gift deed used for?
• Transfer of ownership: Perhaps the most popular purpose of a gift deed is to transfer ownership of property or assets. These can range from immovable property like real estate, movable property, stocks, bonds or other items of value.
• Estate planning: A gift deed is often used as a tool in estate-planning strategy. Donors prefer the mode of transferring assets during their lifetime so that they can plan implication of estate taxes and make sure that their assets are given away equitably and in keeping with their wishes.
• Donating to charities: Some donors use this legal instrument to support causes and charitable institutions close to their hearts. Hence, many NGOs benefit from such gift deeds.
What are the essential components of a gift deed?
• Transfer of ownership: There has to be transfer of ownership in the gift entity, that is, the receiver inherits the right to sell the gift.
• Movable or immovable property: The gift entity can be either movable or immovable property.
• Transfer without consideration: There can’t be any money involved since this is not a transaction. A gift deed is made for love, affection and devotion.
• Transfer has to be voluntary: The transfer of property in a gift deed has to be made by mutual consent, not by coercion, falsification, fraud or mistake.
• Acceptance: The acceptance of the gift has to be made by or on behalf of the person receiving it (transferee) during the donor’s lifetime. If any transferee doesn’t accept, the entire deed is rendered invalid.
• Present property: The property being gifted must be there in existence at present and owned by the donor. Any property which is supposed to come up in future, or comes in the ownership of the donor in future cannot be earmarked for a valid a gift deed.
• Donor can’t be minor: A minor owner cannot make a gift deed, while a minor’s guardian can accept the gift on his/her behalf. Hence a minor can be a donee but never a donor.
• Different from will: While a will specifically mentions how assets are to be distributed after the demise of the testator, a gift deed grants ownership of the property while the donor is still alive.
A valid gift deed must be:
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