In the legal world, gifts must be voluntarily transferred from one party to another, and with the free will of the person who is making the transfer. Also, during a gift transfer, there cannot be any suggestion of “undue influence.” The basic idea behind undue influence is that another party wrongfully influenced the donor in some way that resulted in the donor being talked into giving that influencer the gift.
A person can prove undue influence in several different ways like by examining the statements or behavior made by the recipient (i.e., the person receiving the gift). Some acts, such as threats, fraud, misrepresentation, and physical and/or moral coercion, can undermine the donor’s will power or free agency. In other words, the donor may feel as if they are being compelled or forced to give the influencer a gift.
Therefore, in the context of gift giving, the basic test for undue influence is whether the donor acted voluntarily, willfully, and with free agency.
How is Undue Influence Determined?
As discussed above, undue influence can be determined in a number of ways. When attempting to prove undue influence in a gift transfer before the court, a judge will typically look at the individual surrounding facts of a particular case. This may include assessing some of the following factors, such as:
- Whether other parties knew about the gift;
- Whether the gift was the outcome of hastily made decisions or actions;
- Whether the party who benefited from the gift took some sort of questionable action in securing it;
- Whether the gift was consistent with the prior plans or statements that the donor made before giving the gift;
- The donor’s background (e.g., age, mental capacity, physical condition, etc.);
- The type of relationship between the donor and the recipient (e.g., were they relatives or friends? Or was their relationship more professional or confidential in nature?);
- Whether the donor received independent advice from someone other than the recipient before making the transfer; and
- Each party’s motive in giving and receiving the gift.
Thus, the court may need to examine the “totality of the circumstances” in order to find whether or not undue influence in the transfer existed. It should be noted that the outcome of each case can be different since the decision will depend on the facts and background of the parties involved.
What Happens to a Gift If Undue Influence was Involved?
In most cases, gift transfers based on an act of undue influence are generally considered revocable. This means that a donor can take back their gift, or alternatively, the recipient will be required to return the gift to them if it is possible.
For example, if it can be proven that a recipient persuaded the donor to change the contents of their will so that they could receive a particular gift, then the court may invalidate the will and order the recipient to return the gift to the donor’s estate.
If a situation arises where a gift has been altered, destroyed, lost, or cannot be located, the recipient may need to reimburse the donor through a monetary payment. The amount of the payment will be calculated in accordance with fair market values at the time of the transfer.
For instance, suppose the recipient talked the donor into gifting them their beach house and they throw a party that destroys the entire house. In such an instance, the recipient will be responsible for paying the donor or their estate the fair market value of what the house cost when it was transferred to them.
Additionally, the recipient may also have to pay damages for any losses that resulted from the transfer (e.g., hiring a real estate appraiser to determine the cost of the gifted beach house).
Do I Need to Hire a Lawyer for Help with Undue Influence in a Gift Transfer?
Transfer of gifts can be a very sensitive subject for some parties because they often involve many aspects that are personal in nature and may have an effect on both the donor and recipient’s relationship. Just imagine how hard such a situation might be for a family where one of several children wrongfully influenced a parent to gift them all of their money.
As such, when a recipient takes advantage of a donor and wrongfully influences them to transfer a gift, the law provides a way to hold them accountable for their actions. However, filing a legal action may also further destroy the relationship of the parties, so these situations must be handled with extreme care.
Therefore, if you have any questions, concerns or need help regarding an issue that involves undue influence and gifts, then it may be in your best interest to contact a local estate lawyer for advice.
An experienced estate lawyer can help you navigate this tricky situation as much as possible, can discuss the potential outcome of your matter, and can assist you with filing a lawsuit against a party as well.
Additionally, your lawyer will also be able to provide representation on your behalf in court if necessary, and can help you to recover any losses that you suffered as a result of undue influence.