Things to Consider When Gifting Property to an Unmarried Partner
How do large gifts between unmarried couples function from an estate planning perspective? “Gift” has a specific legal meaning rooted in contract law. It is something that is transferred from one person to another for a nonbusiness reason and without compensation. A few conditions must be met to make a gift valid:
● The person giving the item intends it as a gift.
● The giver actually delivers the gift to the receiver.
● The receiver accepts the gift from the giver.
If a gift meets these requirements, contract law recognizes it as a valid gift. As a result, the gift is enforceable and, in most cases, it cannot be taken back. That is, once a gift is successfully made, the giver loses control over the gifted money or property.
Gifting an object of relatively little value probably will not be a big deal in the event of a breakup. It is unlikely that somebody will ask for a Christmas present back so they can return it for a refund. But if the gift is something large—like joint ownership in a property— major issues can arise.
Imagine that you add your partner to the title of your house so that legally, half of the house is theirs. After a split, they are unwilling to return their share to you. To get it back, you would have to buy it from them. But what if they do not want to sell it to you? Alternatively, they could buy your share or they could sell their share to another party. They could also petition the court to perform a forced sale of the property and distribute the proceeds among the two of you, or ask the court to partition the property.
A house is a dramatic example of the perils of gifting, but the same legal considerations apply to any gift, with the possible exception of an engagement ring. Because it is a conditional gift that is predicated on a future event taking place, the giver may have the right to get the ring back if the future event (the wedding) does not take place. However, courts have taken different views of this issue, and it could come down to the specifics of the broken engagement.
Before gifting property or large assets to another person, there is no shame in talking to a lawyer about how to protect yourself. If you have any questions about how to gift property to your partner, please contact us.