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I’m a Business Owner. How Do I Use a Gift Deed?

As a business owner, you may be thinking of passing on your business to a family member or donating it to charity for them to manage when you retire. In these circumstances, a gift deed might be suitable for you. This article sets out what a gift deed is, the benefits of having a gift deed and how you can use one. 

What is a Gift Deed? 

A gift deed is a document recording the transfer of ownership over property between parties. Normally, parties do this voluntarily and without payment from the other party. However, you must take a few steps for the gift deed to be legally binding. First, both parties must sign the gift deed like any other typical contract. Note that there are specific rules to follow when executing a deed, including having someone witness your signature. However, a gift deed does not require any consideration. This is the difference between a deed and an agreement, as a deed is the most solemn indication that the parties intend to be bound. 

Under a gift deed, a donor can gift a range of items, including: 

  • real estate;
  • money;
  • shares; and
  • material possessions.

How Does a Gift Deed Benefit Me?

As a business owner, a gift deed is useful for the following reasons: 

  • it allows you to transfer property to the intended recipient;
  • it makes the intention of the parties clear regarding the ‘gift’ or property you are transferring; and 
  • it acts as proof of the parties’ legal transfer of property ownership. 
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How Do I Use a Gift Deed?

A gift deed is similar to a contract indicating the arrangement’s key terms between both parties. Crucially, you need to be clear on the type of gift you will be gifting to the other party before preparing the gift deed. In addition, depending on the type of property being gifted, you may need to consider additional requirements to ensure that a legally-recognised transfer has occurred. 

For example, with real property, you must consider whether the land you transfer is considered Torrens title land or land under the general law. If you are transferring Torrens title land, you must record the transfer on the relevant Register. 

A good rule of thumb is ensuring you have done everything necessary to transfer property ownership. If the gift recipient requires further help from you or cannot ‘own’ the gift fully, the chances of the gift being legally enforceable will be low. 

In short, to use a gift deed, you must ensure that you execute the deed validly executed and meet any additional requirements (where applicable) depending on the type of property you are transferring. While a gift deed has benefits, it is prudent to consider other aspects that may affect whether you choose to use a gift deed to make the transfer. This is especially so for the transfer of real estate, where you should consider if any further expenditures may impact the transfer.

When using a gift deed, you must use it only where you intend the property to be a gift. Accordingly, no conditions should be imposed in relation to making the gift.

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Key Takeaways 

You can gift your property as a business owner through a gift deed. Generally, this differs from a typical contract as the other party does not need to offer any consideration in return for the gift.

Please note that LegalVision is a commercial law firm and cannot assist with these matters. We recommend you contact your local law society.

Frequently Asked Questions 

What is a gift deed? 

A gift deed or a deed of gift is a document that transfers property from one person to the other individual or an organisation as a gift. There are no conditions imposed concerning the making of the gift. 

Why is a gift deed beneficial? 

It allows you to transfer assets to individuals or organisations you would like. It sets out the parties’ intention regarding the ‘gift’ and acts as evidence of the legal transfer of property ownership between the parties. 

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Shauna Ng

Shauna Ng

Lawyer | View profile

Shauna is a Lawyer in LegalVision’s Corporate and Commercial and Regulatory and Compliance teams. She assists a diverse range of clients in drafting and reviewing their agreements and also provides regulatory and compliance advice in various areas as required. Shauna has a particular interest in health-related services, including NDIS services.

Qualifications: Bachelor of Laws (Hons), Flinders University, Bachelor of Accountancy, Nanyang Technological University.

Read all articles by Shauna

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