WHEN IS A GIFT NOT A GIFT?
By Evann O'Donnell, Esq.
When you receive a gift, do you expect to give it back?
Generally, a gift is given without expectation of reciprocation or further action on your part- you could throw it out, sell it, or even re-gift it (hopefully not back to the same person!). A contract, on the other hand, is a bargain for exchange: you trade a good or service for something of similar value.
But what if you receive a gift… that has a condition? A conditional gift is one that is subject to or dependent on a condition. Maryland common law holds that conditional gifts must be honored, but thankfully these gifts-with-strings-attached do not happen often in our culture. In order for the condition to be enforceable in a court of law, it must be clearly expressed or known prior to transferring the gift. If you accept the gift knowing the condition, you have accepted the condition as well. An example of an expressed conditional gift could be:
- “I’m giving you this car on the condition that you pass your first semester of college.”
- “My estate will transfer to you in the event that the Detroit Tigers win the World Series by 2020. If they do not, it will go to your sister.”
- “I leave Melissa my very best sewing machine, on the condition that she sews one new quilt a year for five years. If she does not, it will transfer to Jake.”
The “expression” can be either written or oral, though it is much easier to enforce (or protect) a conditional gift when the condition is in writing and signed by the giver.
But what about the second way a condition is given- where it is simply “known”? This is very rare in our culture. The most common (and frankly, one of the only well-known) implied conditions is the engagement ring. When you accept an engagement ring, you have agreed to the condition to marry the person who proposed. Maryland has found that this amounts to an implied conditional gift. And so if the recipient of the engagement ring breaks off the engagement... that’s right, in Maryland you have to return the ring!
But the important element of the conditional gift is that both people know of the condition, whether it is simply known or stated outright, prior to the gift. When a condition is not stated, but is simply known, you may have a much more difficult time proving that the condition was known if the receiver of the gift later fails the condition and refuses to return the gift, resulting in large legal fees and major headaches. For instance, what if you believe the implied condition of the gift you gave is known in your religion- and that of the receiver of the gift- but they later claim they never heard of that particular religious teaching? You may need to hire a religious scholar to testify at your trial to convince the court that the condition is so well known in your religious community that the receiver could not possibly be ignorant. As you can imagine, it is difficult to prove what someone may or may not know- especially where they may have the motive to lie in order to claim a conditional gift was unconditional. Other examples of implied conditional gifts:
- Sarah’s family has a generations-long tradition that everyone in the family follows: you are given a car when you turn 16, but if you ever miss the Sunday family meal, it is revoked. Sarah has seen several family members miss the meal and then lose their car. Sarah is given the keys to a new car at age 16, but no mention of the well-known condition is necessary.
- Andre is a part of a religious group with a well-known tenet that wedding gifts are conditioned on the marital success-- meaning, you never divorce. Should the parties divorce, all gifts are revoked. Andre has been raised in this religion since birth and has read the religious texts that mention this tenet.
Once you have satisfied the condition, whether implied or expressed, the giver cannot revoke the gift later. The condition is the only obstacle to acquiring your gift. So to go back to the engagement ring example: if you marry, but later divorce, do you have to return the ring? No: you have satisfied the implied condition: to marry. Just because you may later disappoint the giver does not mean they can demand a return of a gift.
If you have questions about a gift that you believe may be conditional, do not hesitate to call our office at 301-218-9400. In an increasingly diverse society - with different religions such as Hinduism introducing new customs of gift giving to our culture - we have had the opportunity to address the issue of dowry (marriage related gifts) at trial. In doing so we have used expert testimony to ensure our clients prevail. We can assist in determining whether a gift is conditional, or help you put your conditions into writing to prevent misunderstandings and litigation later. Preparation can ensure your wishes are carried out exactly as you hoped.