A gift deed is a document signed by two parties whereby one party (the “donor”) voluntarily, and without payment being required from the other party, transfers ownership of property to the other party (the “recipient”).
1. Why use a gift deed?
People make gifts every day. In most cases these gifts are not documented, as they are not required to be documented. However, there may be circumstances where the donor and/or the recipient want to document the gift by entering into a gift deed to confirm that they intended to make the gift and transfer ownership of the property.
2. In what circumstances should I use a gift deed?
A gift deed should be used in circumstances where (i) the donor makes a gift to the recipient, (ii) there are no conditions imposed in relation to the making of the gift and (iii) the donor and/or the recipient would like to document that the transfer of ownership of the property from the donor to the recipient was by way of gift. Documenting this transfer of ownership may be important if, for example, the donor subsequently dies and members of the donor’s family contend that the property was loaned, not gifted, to the recipient.
Opting for a gift deed legally transfers property ownership from you to someone else.
3. Further Issues to Consider
Before choosing a gift deed it is worth considering the following:
A. Occupation – If the property being gifted is dwelling, who will be living at the dwelling and what rights will they have?
B. Expenditure – Who will deal with the cost of insurance, maintenance and service expenditure of the property?
C. Tax Implications – What are the potential tax implications of entering into a gift deed?
Conclusion
Whilst most gift deed transfers are carried out between trusted family members and run smoothly, there are potential issues with any process.
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