Gift Deed
What Is a Gift Deed?
A gift deed is a deed that is made in “consideration of love and affection” rather than for a monetary reward. It is a legal document that transfers property to another individual or entity as a gift.
If you give real estate or bonds with a gift deed, then it will be necessary to register this with the appropriate authority. This is done by formally valuing the property being gifted and paying the required stamp and transfer duties.
These types of transfers can also be reported as gifts for federal tax purposes. However, it’s important to note that they cannot be used as a method to avoid estate taxes, as gifts are taken into consideration when calculating this type of tax.
Read on to learn about the different types of gift deeds, their varying uses, and relevant key terms.
Key Terms
To understand gift deeds, there are various terms that it is necessary to familiarize yourself with. One of these is “donor”, which is the person giving the gift. On the other hand, a “donee” is the individual that will be receiving the gift.
Another helpful term to know is the “agent”. This is the person that will follow the directions of the donor to administer the gift. In the majority of cases, this is not required, but it can be necessary for situations such as when the gift is being given to a minor.
What Are the Different Types and Uses of Gift Deeds?
There are two main types of gift deeds, “revocable” and “irrevocable”. When a donor uses a gift deed to signify a future intention to give a gift, this is known as revocable.
The more common type of gift deed is used to transfer property as soon as the document has been signed and delivered to the donee. In this case, it is known as irrevocable.
Gift deeds are often employed to transfer ownership of real estate, but they are also used to give away money, securities, or personal property. In addition, they can be utilized when making a donation to a charity or non-profit organization.
What Information Should I Include on a Gift Deed?
When creating a gift deed, you should include the following information:
- Who will be receiving the gift
- Whether the deed is revocable or irrevocable
- The type of gift (monetary or non-monetary)
- Information about the donor
- Information about the agent
Advantages and Disadvantages of Gift Deeds
Before creating a gift deed, we recommend taking into consideration the different pros and cons of using this type of legal document.
Below are some of the advantages of a gift deed act:
- It is executed immediately
- Because a gift deed must be registered, it is less liable to litigation
- Transfers using gift deeds are mostly tax-free for both donor and donees
There are also some disadvantages to using gift deeds:
- It is irrevocable post-execution, which can lead to complications if problems arise in the future between the donor and donee
- There are extra costs in the form of stamp duty, which vary from state to state
Related Documents
There are various legal documents that are similar or related to gift deeds in purpose and usage. Some of the most common of these are the following:
- Quitclaim deed: transfers property interest to a family member
- Survivorship deed: creates a joint tenancy in a piece of real estate between two or more individuals
- Warranty deed: also known as a general deed, this shifts an unrestricted title to a property without encumbrances or constraints
- Beneficiary deed: conveys an interest in a property upon the owner’s death
- Last will and testament: defines how assets will be allocated after someone’s death
- Codicil: used to make amends or additions to a will
Helpful Resources:
Business Standard News - All you wanted to know about the Gift Deed Act?
USLegal, Inc. - Gift Deed Law and Legal Definition
What Is a Gift Deed?
A gift deed is a deed that is made in “consideration of love and affection” rather than for a monetary reward. It is a legal document that transfers property to another individual or entity as a gift.
If you give real estate or bonds with a gift deed, then it will be necessary to register this with the appropriate authority. This is done by formally valuing the property being gifted and paying the required stamp and transfer duties.
These types of transfers can also be reported as gifts for federal tax purposes. However, it’s important to note that they cannot be used as a method to avoid estate taxes, as gifts are taken into consideration when calculating this type of tax.
Read on to learn about the different types of gift deeds, their varying uses, and relevant key terms.
Key Terms
To understand gift deeds, there are various terms that it is necessary to familiarize yourself with. One of these is “donor”, which is the person giving the gift. On the other hand, a “donee” is the individual that will be receiving the gift.
Another helpful term to know is the “agent”. This is the person that will follow the directions of the donor to administer the gift. In the majority of cases, this is not required, but it can be necessary for situations such as when the gift is being given to a minor.
What Are the Different Types and Uses of Gift Deeds?
There are two main types of gift deeds, “revocable” and “irrevocable”. When a donor uses a gift deed to signify a future intention to give a gift, this is known as revocable.
The more common type of gift deed is used to transfer property as soon as the document has been signed and delivered to the donee. In this case, it is known as irrevocable.
Gift deeds are often employed to transfer ownership of real estate, but they are also used to give away money, securities, or personal property. In addition, they can be utilized when making a donation to a charity or non-profit organization.
What Information Should I Include on a Gift Deed?
When creating a gift deed, you should include the following information:
- Who will be receiving the gift
- Whether the deed is revocable or irrevocable
- The type of gift (monetary or non-monetary)
- Information about the donor
- Information about the agent
Advantages and Disadvantages of Gift Deeds
Before creating a gift deed, we recommend taking into consideration the different pros and cons of using this type of legal document.
Below are some of the advantages of a gift deed act:
- It is executed immediately
- Because a gift deed must be registered, it is less liable to litigation
- Transfers using gift deeds are mostly tax-free for both donor and donees
There are also some disadvantages to using gift deeds:
- It is irrevocable post-execution, which can lead to complications if problems arise in the future between the donor and donee
- There are extra costs in the form of stamp duty, which vary from state to state
Related Documents
There are various legal documents that are similar or related to gift deeds in purpose and usage. Some of the most common of these are the following:
- Quitclaim deed: transfers property interest to a family member
- Survivorship deed: creates a joint tenancy in a piece of real estate between two or more individuals
- Warranty deed: also known as a general deed, this shifts an unrestricted title to a property without encumbrances or constraints
- Beneficiary deed: conveys an interest in a property upon the owner’s death
- Last will and testament: defines how assets will be allocated after someone’s death
- Codicil: used to make amends or additions to a will
Helpful Resources:
Business Standard News - All you wanted to know about the Gift Deed Act?
USLegal, Inc. - Gift Deed Law and Legal Definition