In Illinois, a gift is a transfer of property from one person or entity to a different person or entity, which is done for a personal reason and not for a business reason. The property that is given as a gift must be voluntarily transferred without any form of compensation from the recipient.
The donor is the person who gives someone else a gift. That person should give the property with the intent to transfer it permanently.
There are several areas of Illinois law that can govern gifts, such as property law, tax law, and estate law. It is also important to be aware that a gift tax may apply when gifts are given.
When a court is trying to determine if something should be considered a gift, it will review whether the property was provided without any type of obligation attached. Also, to be considered a gift, the property must be given without the donor receiving any benefits and without any expectations.
One of the main considerations a court will review when determining whether something was a gift is the intent of the donor. This will commonly include whether or not the property was provided from a detached and disinterested generosity from the donor based on their respect, charity, admiration, and other similar sentiments for the recipient.
One example of something that would not be considered a gift is if someone offered their friend a new handbag in exchange for decorating their living room. This handbag would not be considered a gift but would be payment for the services their friend provided.
Whenever there are questions about what may be considered a gift in Illinois or the proper steps to take to make sure a gift is properly provided, it is essential to have a legal consultation in Illinois.
In Illinois, How Can I Prove the Elements of a Gift?
In the State of Illinois, as well as in other states, it can be hard to show the necessary elements of proof for a gift. The best method for proving that a piece of property is a gift is to provide evidence of their intent. As previously discussed, a donor has to intend to make the transfer of the property a permanent one and cannot expect anything in return.
If an individual wants to prove they got something as a gift, it can be helpful for them to have evidence of the transfer and the donor’s intent related to the transfer. Sometimes, it may simply not be possible to prove that something qualifies as a gift under the applicable tax laws.
When this happens, the recipient may be required to pay state and federal income tax on the fair market value of what they received. If someone wants to avoid disputes about the nature of a transfer, they can take steps such as:
- Make intent clear: A donor should not make a transfer until they know whether it is a loan or a gift. Once the donor has decided it is a gift, that can be documented.
- Describe the nature of the transfer: The recipient and donor can draft a joint statement outlining the nature of the transfer. It can be helpful to include a detailed description, or even photographs, of the property and the donor’s intent.
- Use witnesses: Having witnesses sign the document can also help. If the parties want even more protection, they can sign before a notary.
If someone wants to show their transfer is a gift, their written document can describe the amount they are giving, their intent to give it permanently, and that they are not receiving anything in return. If the property or money is intended as a loan, the document can then be used to show that instead.
When someone is giving a home as a gift, the donor can sign a deed that transfers the property and the recipient can file it in the county where the property sits. This document shows the transfer and can be used as evidence of being a gift. The title to a vehicle can be used in a similar manner.
If there are other written records about the gift transfer, such as communications between the parties that talk about the property being a gift, those may also be used as evidence of the donor’s intent to give a gift and not receive compensation.
Illinois lawyers can help make sure that people properly document the intent behind their gift transfers so that they can avoid future tax issues or disputes.
What Can Be Transferred as a Gift in Illinois?
In Illinois, any item, including money, can be transferred as a gift. Examples of items can include jewelry and artwork.
As previously discussed, real property can also be transferred as a gift. Intellectual property, such as trademarks, patents, and copyrights, can also be transferred as a gift. Additional examples can include financial interests, for example, bonds, stocks, and other types of financial interests.
Can I Legally Take a Gift Back in Illinois?
For something to be considered a gift, the property that is being transferred has to be done so permanently from a donor to a recipient. When a donor’s intent is not to give the recipient the item permanently, it will be a loan instead.
Although it may be possible to take back a gift, it may cause numerous issues. For example, if the gift was property, the individual may have to pay gift tax on that transfer. It would be highly unlikely that someone could get a refund on paid gift taxes if the gift was reversed.
The Internal Revenue Service (IRS) provides amounts every year that someone can give as a gift without a recipient having to pay taxes. This amount changes yearly, so it is important to review before giving a gift.
If someone gives a gift that goes beyond the yearly amount, it may be heavily taxed by the IRS and the State of Illinois may also collect taxes on that same gift transfer.
Do I Need a Lawyer for Assistance With a Gift?
Having an Illinois estate lawyers help with gift giving can be extremely helpful to avoid any future issues related to the gift. Having a lawyer involved in a gift transfer will make sure that the proper evidence is created to show that it is a gift and that it meets the requirements to be a gift.
You can easily use LegalMatch to find an Illinois lawyer who can help you with your gift transfer in as little as 15 minutes. It is free for you to submit your Illinois gift question on the website.
You will get responses from member lawyers in your area who are ready to help you with your Illinois gift issue or concern. It is very important to consult with your lawyer before the gift transaction to make sure it is completed properly and evidence is provided.
You can review the background, fees, and previous client reviews from Illinois lawyers who respond to your submission. Some of these lawyers may also give free initial consultations to potential clients, allowing you to find the best lawyer for your needs at no cost.
