What is a Gift Deed?
A gift deed is an official legal document used to give a gift of property or money to another person. It transfers the money or ownership of property from the recipient, without the exchange of money or another type of property. The transfer also occurs without requiring the recipient to work for what he receives. Property transferred in this manner is usually given out of the love and affection the giver has for the recipient.
The person who creates and executes a gift deed to transfer money or property from himself to another person is called a donor. Though he may own 100% interest in the property he intends to transfer this way, his signature isn’t enough to make the document legal. Instead, the donor must sign the form and have it witnessed. The number of signatures needed may vary from place to place, but many jurisdictions require two witnesses.
The people who sign as witnesses have to be disinterested parties, which means that they cannot have a stake in the transfer of the property. If the person stands to benefit or take a loss because of the transfer of the property, he cannot be considered disinterested and cannot act as a witness. For example, the wife of a person who will receive property may not be permitted to witness the document, as she may benefit from the gift. There may be other requirements set for witnessing the gift, depending on the jurisdiction in which it is executed.
Sometimes, people create revocable gift deeds. In such a situation, the donor drafts the document but does not give it to the recipient right away. Instead, he holds onto the document until he feels ready to give it to the recipient. In such a case, the donor may revoke the gift if he sees fit to do so, and he does not have to deliver or hand over the property or money to the recipient, even if the deed is complete, signed, and witnessed.
A donor cannot change or revoke an irrevocable gift deed. In this situation, the owner drafts the document and has it signed and witnessed in accordance with his jurisdiction’s laws. Once he gives the document to the recipient, the recipient takes immediate legal ownership of the gift. The donor cannot change his mind and reclaim the money or property he has transferred in this manner.
I did a royalty gift deed to my children. Do I have to pay a gift tax on that? Only one property at the time was producing any royalties.
@ Anon74645- It really depends on the amount or value of the quick deed and the state. The general gist of the law is that anything under $10,000 to $12,000 in value will not be taxed to either party. When a tax is levied, the gift tax is levied on the donor, not the recipient. I have had family members give me cash for school (less than $10,000) and neither party had to pay tax. I did have to report the income on my financial aid forms however. If you are considering a large gift, you should probably consult a lawyer in your area just to be sure that all tax laws are followed. You may also find that a lawyer can help you structure the gift to minimize the amount of taxes paid.
If a person gives a gift deed, is there a tax for the person receiving the deed?
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