Are you wondering if it’s possible for someone to sue you for a gift that they gave you in the past? They’re somewhat familiar tales of family strife and love-gone-bad when lawsuits over inheritances, engagement rings, and other gifts pop up in the news on a semi-regular basis. Parents suing their adult-aged children over purported loans that the kids claim were gifts. A spurned fiancé suing his ex-lover for the return of an engagement ring after discovering an illicit affair.
These stories raise several seemingly obvious questions with less-than-simple answers. So when is a gift not really a gift at all? Are all gifts unconditional, or can they be legally taken back for whatever reason the giver can come up with? Can someone sue you for a gift they gave you?
Transfer of property
The important thing to understand is that all gifts aren’t the same depending on the circumstances surrounding the giving of the gift. In situations that end up in court, they’re not black-and-white scenarios in which a gift is obviously warranted and easily defined. It’s not likely that a case will involve someone showing up to a birthday party with a gift-wrapped box addressed to the person celebrating who later seeks to get it back after a falling-out.
If the gift is worth a lot of money, it’s worth it to get legal advice. Sometimes just getting a lawyer to send a legal letter can help you get money back or your personal property.
Sometimes there is an easy solution to legal issues. Other times you might need to go to Small Claims Court or Supreme Court.
If someone gifts me something, can they take legal action?
In Canada and the United States, though, the laws around the giving of gifts involve many different legal principles and causes of action, from contract law to the law of constructive trusts, as well as tax implications and even fraud and unjust enrichment in extreme cases. The concept of romantic gifts and marital property division upon separation also come into play, while estate laws and inheritances left in wills after the death of a relative may also raise legal questions when it comes to gifts or donations promised to institutions such as universities, libraries, and government archives.
At its heart, a gift is defined as a voluntary transfer of property from one party to another without the need for payment but often in exchange for “love and consideration.” The longstanding practice of exchanging gifts between friends and family members on special occasions such as birthdays, Christmases, or other holidays isn’t usually at the heart of legal battles over supposed gifts that a giver or doner suddenly wants back.
Litigation involving the giving and receiving of gifts, rather, typically involves large sums of money gifted or loaned by parents to their kids, or ex-lovers quarrelling over an expensive engagement ring after calling off a wedding.
It’s not unusual to see lawsuits over a Christmas gift or even sometimes gift cards…
Common law and civil law principles of gift-giving in Canada
Under civil law in Canada, a gift is seen as a contract where the giver of a gift is making a “gratuitous” donation of property, be that a piece of land or a piece of jewellery or any item of value, to another without expectation of being paid back. In other words, there’s no gain of advantage or placement of obligation on the person receiving a gift. This distinguishes a gift contract, or “gratuitous contract,” from an “onerous” contract where the property is traded for so-called “valuable consideration.”
The giver or donor, in that respect, transfers something of value to someone else without receiving or expecting something in return. The intentions behind a gift or donation also come into play because the giver must not expect a tangible or valuable benefit from making the donation or giving the gift. According to the Canadian Department of Justice, “donative intent” means that gifts can’t be given as a “settlement of a moral or natural obligation.”
Legal issues regarding personal property
But under Quebec’s Civil Code, for example, a gift can be given in such circumstances, such as a reward for services rendered, known as a “remunerative gift” on top of the value of the services. An employer giving a long-time employee a valuable watch upon retirement in addition to a bonus and a pension could be considered a “remunerative gift” under Canadian tax law, for instance.
If someone wants to sue you for a gift, they are going to need to invest a lot of time and money into it. It better be worth it!
It can trigger tax obligations
Gifts are not subject to taxes for the most part, but certain situations may trigger tax obligations though. The Canadian government, for tax purposes, categorizes two types of gifts: “mortis causa” and “inter vivos.” The first involves gifts that transfer upon the death of a donor. Such “mortis causa” gifts can be taken back if the donor remains alive and changes their mind, or gets divorced since such gifts can only be made under contracts of marriage.
Gifts of this type, though, must be made in “contemplation” of a donor’s imminent death in the face of a “mortal illness,” for example. For the taxman to validate a gift under this principle, there are three conditions that have to be met. The donor’s death is “imminent,” and that’s why they’re giving the property away.
Can someone sue me for over money they gifted?
The second requires delivery and transfer of possession of the gifted property. Thirdly, the gift will only be seen as “complete” upon the donor’s death. If they make a recovery from a mortal illness, the gift is no longer on the table and is “automatically revoked.”
The other type, “inter vivos” gifts, involve givers of gifts “divesting” themselves from ownership of the gifted property with the intention of giving it to someone else. However, these gifts can be conditional and revoked, though they can be found “invalid” under tax law because they can be taken back at the donor’s “will.”
Legal precedents and lawsuits over “gifts”
But gifts left to the family in this manner are not the type that typically ends up in court, other than cases challenging wills and actions of an estate’s executor or attorney. The types of gifts that generate legal controversies that make headlines involve “romantic gifts” and gifts of large sums of money from parents to children. Oftentimes, the parents will claim in court that they loaned their offspring money for cars or a down payment on a house expecting to be paid back, only to have their children counter that the money was a gift that wasn’t expected to be paid back.
Sue you for a gift
In 2011, for example, the British Columbia Court of Appeal heard the case of Beaverstock v. Beaverstock, where a mother claimed to have loaned her son $50,000 to help with the mortgage payments on a property in Alberta. The son, according to the ruling, was having trouble making the payments and sought financial help from his mother in 2005. But he died two years later, and the proceeds from the loan went to his wife, who was also in charge of the estate. The mother claimed it was a loan, while her son’s widow claimed it was a gift.
Reasonable expectation of repayment
The court also heard conflicting evidence about whether the son had admitted to owing his mother $50,000 before passing away. While the trial court found that there hadn’t been a “reasonable expectation of repayment,” the appellate court found the judge had considered the wrong factors for determining whether a “gratuitous transfer” was in fact a loan and not intended as a gift to a family member in need. The most important factor in cases about these types of gifts, the appellate court found, is the “actual intention” of the person transferring the property or money.
The appellate court overturned the lower court’s decision and granted a $50,000 judgement to the mother, citing a 2007 Supreme Court of Canada case known as Pecore v. Pecore, which set out the standard for a gift giver’s “actual intention” as the “pivotal fact” in such cases.
As you can see, it’s not easy to sue for a gift. That’s why you need a lawyer.
In the United States, meanwhile, the concept of “romantic gifts” between unmarried partners and spouses has seen more than its fair share of legal controversies over the years. But it was in 2012 when the U.S. saw an “unprecedented new theory” of the “revocability of romantic gifts” made its way into an American federal court. In a 2012 discussion paper for Harvard Law, commentator Ruth Sarah Lee outlined the case of a Washington woman named Shea Saenger, a convicted murderer who had conned an elderly man with Alzheimer’s disease out of more than $2 million.
According to Lee’s paper, American courts typically used five legal theories in cases of people seeking the return of romantic gifts including conditional gifts or pledges, “consideration,” fraud and unjust enrichment. But Saenger’s case saw a new development, the presence of “criminal fraud” that saw the receiver of a romantic gift punished “beyond the cost of the gift.”
Saenger’s financial exploitation of her elderly boyfriend also saw her charged with mail fraud in federal court in Washington state, which Lee argued was a “great departure” from other cases involving attempts to revoke or take back romantic gifts. Lee claims this was because Saenger not only had to pay back the millions taken but also face punishment beyond that amount. In that respect, the Saenger case was novel because it involves circumstances where a donor is actually a victim of exploitation and fraud by a “gold digger.”
Legal advice for conditional gifts
Lawsuits and legal battles over gifts are not uncommon, but they often involve deeply personal and unique circumstances especially when they involve families and romantic relationships. Courts in both the U.S. and Canada step in when there’s a dispute over the intention of a donor to determine whether a gift is revocable under certain conditions, or if it was a gift at all.
The difficulty civil courts have in these cases is determining a donor’s intent and the terms under which a gift is given as a matter of contract law. With so many cases involving close families and romantic partners, there’s not usually an evidentiary paper trail or written contract to refer to, which leaves judges and juries to rely on witness testimony about deals sealed with hugs and handshakes rather than signatures and dated paperwork. So if you find yourself the recipient of a substantial gift from a family member or romantic partner, it’s not a bad idea to document it as such in case of a change of heart.
Can someone sue you for a gift they gave you conclusion
Keep all text messages and other messages related to the gift. Then go talk to a lawyer. When you book a consultation, have a list of other related questions that you might have. It’s worth taking some time to learn about the attorney-client relationship before booking a consultation.
You don’t need a personal injury lawyer for dealing with gift disputes. You should find a civil litigation lawyer instead.
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