Why do a Deed of Gift?

Did someone give you a gift, but now wants it back? Did your dad give you a gift and after he died your family said it was a loan? And that you now have to pay it back?

What is a Deed of Gift

A Deed of Gift is conclusive proof that the money or asset was actually given to the person. This is with no strings attached.

A Deed of Gift is a deed. It is a legal document. It is signed by the donor. The donor is the person giving the money or the asset away.  The Deed of Gift states that the donor voluntarily and without payment gifts the property to the recipient. The Deed of Gift transfers ownership from the donor to the recipient.

1. Why use a Deed of Gift?

When a father hands money or an asset to a wife or child it is considered to be a gift. But when a wife or child hands money or an asset to the husband it is deemed to be a loan. There are many other strange rules. To put the matter beyond doubt the Deed of Gift clearly sets out that the transfer of the asset is a gift – with no strings attached. It is an outright gift.

2. When do I need a Deed of Gift?

You build a Deed of Gift when:

(i) the donor makes a gift to the recipient, and

(ii) there are no conditions imposed in the making of the gift.

For example ‘mum and dad’ give their son a car. It is an outright gift. They don’t want the car back. And they want no money for the car. ‘Mum and dad’ are the donors. Their son is the recipient.

The opposite to a Deed of Gift would be a:

Loan Agreement

Parent lending money to a child

Spouse loan agreement

Do I have to pay it back when the Donor dies?

When the donor dies there is evidence that the gift was a gift. It, therefore, does not need to be paid back to the estate.

The Deed of Gift legally transfers property ownership to the recipient. As the transfer takes place before you die it can’t be challenged like a Will. This is assuming the donor was of sound mind and not forced to sign the Deed of Gift. Get a doctor’s certificate saying you are of sound mind and keep that with the Deed of Gift.

3. Tax

There are no taxation issues in Australia. There is no taxation on gifts. This is provided that the gift is made for ‘natural love and affection’. You can have ‘natural love and affection’ between companies, humans and trusts. However if:

3.1  you are gifting money to an employee there may be Fringe Benefit Tax
3.2  a company gives money to a related human or trust then there may be Division 7A ITAA 1936 issues
3.3  you are on a government pension there may be a loss of Centrelink or similar benefits under ‘deprivation’ and other rules
3.4  you are gifting to a charity you may get a tax deduction (but if you can’t use the tax deduction it may be better to gift the money to someone that is paying tax and let them gift the money to the charity, instead)

Speak to us, your accountant or financial planner in these instances.

What does this document contain?

1. The Deed of Gift Document

2. Our law firm’s letter of advice on our law firm’s letterhead and signed by one of our partners

But there is no ‘consideration’ in a Deed of Gift

Consideration is when someone pays you for what you are getting. For example, if you sell a car for $30,000 then the consideration for the car is the $30,000. But with a gift, there is no consideration. However, that is fine if you sign the legal document as a ‘deed’. Your Deed of Gift is a deed. It is legally binding without the need of consideration.

But I got the gift last year

The Deed of Gift still works even though the Donor handed over the assets sometime in the past. It is never too late to build a Deed of Gift.

Why is it better to prepare my legal document on a law firm’s website?

You are dealing directly with a law firm’s website, therefore you:

1. retain legal professional privilege,
2. benefit directly from the law firm’s PI insurance
3. receive legal advice from us.
4. 100% money back guarantee on every document built.

Contact us for more legal advice.

For more legal advice telephone us. We are a law firm. We can help you answer the questions.

Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
National Australian law firm
39 Stirling Highway, Nedlands, WA
Mobile: 0477 796 959
National: 1800 141 612
Reception: 08 6389 0100
Email: brett@legalconsolidated.com
Skype: brettkennethdavies