In New York, a gift is defined as when an individual or an entity gives property to another individual or entity for a personal reason and not a business one. The person who gives the property is called the donor.
The property that the donor gives to the recipient should be done in a voluntary manner and without the expectation of compensation. Additionally, the donor should intend for that property transfer to be a permanent one.
Gifts are a subject that can involve more than one area of the law, such as tax law, property law, and estate law. Specifically, gifts can be included in wills, trusts, and estates.
Another issue that can arise related to giving gifts is gift tax. If there is a dispute about whether property was given as a gift, the court will examine whether it was given without any type of legal or moral obligation.
In order for property that is transferred to qualify as a gift under the law, the transfer has to be made without any type of expectation on the part of the person giving the gift and they will not benefit or get anything in return in the future.
When a court is making a determination of whether property was given as a gift, it will examine evidence of the donor’s intent. If, for example, someone offers an item in exchange for a service, such as washing a car, it is not considered a gift.
Instead, the property is treated as payment for services that were rendered. This means that the item is considered taxable income to the individual who receives the item because it was not transferred without compensation.
It can be helpful to have a legal consultation in New York if someone is looking to transfer property as a gift in the state to ensure it is done properly under the law.
In New York, How Can I Prove the Elements of a Gift?
In New York, similar to other states, it can be hard to show the elements of proof for a gift. This can often be a point of dispute between the parties involved in the transaction.
The most effective way to prove that a property transfer was a gift is using evidence of the donor’s intent. The donor of property must intend to make the transfer permanently without expecting something in return.
When a party is seeking to show that they received property as a gift, evidence of the donor’s intent as well as the transfer of ownership of the property should be presented. If a recipient cannot show that they received a gift under the law, they may have to pay income tax, both state and federal, on the fair market value of the item.
If, on the other hand, the property transfer was done as a loan, it does not count as income. Disputes about the type of transfer that occurred can be avoided when certain steps are taken, such as making the intent clear when the transfer occurs, putting details about the transfer into writing, and having witnesses to those documents.
A donor of property should not transfer the property until they know whether they want it to be a loan or a gift. Once they decide they want to give the gift, they should create a document that describes in detail the property being transferred and that it is, in fact, a gift.
Having witnesses present to sign the document at the time the parties sign it can help its use as evidence in the future. An additional step parties can take, especially in cases of large property transfers, is to have the document notarized.
For example, if someone is giving their child a large cash gift, they may want to create a document that states, “ I am giving my child, Jimmy Joe, $19,000 as a gift. I intend for this transfer to be permanent and do not expect anything in return.” On the other hand, if a parent is loaning their child the $19,000, they would want to document that in the document and perhaps state they expect their child to pay them back over time.
If a house is being transferred, the donor can sign a deed that transfers that house to the recipient. That deed should then be filed in the county where the property sits to provide evidence of transfer of ownership. This deed can be used as evidence to show that the recipient, in fact, does not own the property because the donor gave it to them as a gift.
The same concept can apply to a vehicle using its title. Although it is not filed anywhere, the document itself can be presented as evidence of the transfer of ownership.
In addition, if there are any other records, such as text messages or emails, between the two parties discussing the nature of the transfer, they may also be used as evidence of the intent of the donor.
What Can Be Transferred as a Gift in New York?
Anything that is classified as an item of property may be given as a gift in New York. There are some common examples of personal property, such as art, jewelry, clothing, and other similar items.
As discussed in the example above, real property and vehicles can be given as gifts. There are also types of intellectual property that may be transferred as gifts, including trademarks, copyrights, and patents.
Types of financial property can also be transferred as gifts. Examples of this may include stocks, bonds, cash, and other types of financial interests.
New York lawyers can help clients understand what can be given as gifts, how to properly conduct a transfer, and how to avoid issues in the future.
Can I Legally Take a Gift Back in New York?
When someone gives a gift in New York, they may be wondering whether or not they could potentially take it back. The answer to this question is that it is not likely a good idea, as there can be impacts that cannot be reversed.
As discussed above, gifts are supposed to be transferred permanently. Otherwise, they are considered loans.
One of the main issues with trying to take back gifts is the tax implications that may arise. An individual or entity may have to pay state and federal gift tax when they give a gift. If they try to take back their gift, they will not likely be able to get a refund of any taxes they already paid.
The Internal Revenue Service (IRS) provides yearly amounts that individuals can use as a guide for their gift giving. Each year, individuals and entities are allowed to give certain amounts without penalty. This amount changes yearly, so it is essential to determine the amount for the year an individual or entity is giving their gift.
If the amount goes over this deduction allowed by the IRS that year, hefty tax amounts may apply. As noted above, it is simply best for a donor to wait to give a gift until they are certain they intend to permanently give it away.
Do I Need a Lawyer for Assistance With a Gift?
Yes, it is important to have legal assistance when you are considering giving a gift in New York. A New York estate lawyer can help you understand the requirements for giving a gift, how you can conduct your transaction to ensure that there are no future disputes, and any tax implications your gift may create.
It is always a good idea to consult with your attorney before you give the gift to ensure that the proper protections are in place for both you and the recipient. You can quickly use LegalMatch’s free lawyer matching services to find an attorney near you in as little as 15 minutes.
