Trusts and Estate Planning: Gifts During Life - II
An intentional transfer of property made from the generosity of the transferor is known as a gift. The person who makes a gift is known as the donor. The person who receives a gift is known as the donee.
There are three basic time periods during which a person can make a gift. First, a person can make a gift during life. Second, a person can make a gift at the moment of death (by a transfer conditioned on death). Third, a person can make a gift by will, after death.
This article discusses some aspects of gifts made during life or at the moment of death.
Some Reasons For Making Gifts During Life
There are many reasons for making gifts during life or at the moment of death, rather than by will, after death.
A person may make a gift during life, rather than by will, after death, in order to personally receive the recognition associated with giving the gift. The recognition may be private, where only a few people know about the gift, or the recognition may be public, as where a building is named after the donor.
College alumni often give money and other property to the college or school they attended. Athletic facilities, buildings, quads, and so on may be named after a major donor. Brown University, for example, was named after Nicholas Brown, because during a fund-raising drive during the early 19th century, he gave the largest gift to the college that now bears his name. If a person wants to personally receive the recognition associated with giving a gift, the person has to give the gift during life.
A clever person may make a gift during life, rather than by will, after death, in order to observe the demeanor of the donee after receiving the gift. After giving the gift, the clever donor will watch carefully to see if the donee is grateful, thankful, and able to manage the gift, or if the donee is ungrateful, resentful, and unable to manage the gift. The clever donor will give a small gift during life, and from that small gift determine if the donee deserves a substantial gift, if any, after the donor's death.
Finally, a person may make a gift during life or at the moment of death, rather than by will, after death, because the person knows that testamentary capacity is not required. A person may know that his or her testamentary capacity--knowledge of making a will, knowledge of one's property, and ability to interrelate those factors--is going to be challenged, and that any will he or she makes is going to be contested. Such a person is often well-advised to give gifts of most of his or her property during life. It is more difficult to second-guess a person's actions during life, when the person can defend himself or herself, than it is to second-guess the person's actions after the person's death.
Copyright 2011 LexisNexis, a division of Reed Elsevier Inc.
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