5. How is an ownership interest transferred between individuals?
• Acquiring Resources through Gift – A gift is a transfer of ownership from one party to another without the consideration (mutual exchange of value) necessary to establish an enforceable contract. A gift may, however, transfer ownership of property. A gift normally transfers ownership at the time that the owner expresses intent to transfer the property and physically surrenders the property to someone else who accepts it. The individual receiving the gift must act to accept the gift to make the transfer final.
⁃ Note: The gift made during a person’s life is known as an “inter vivos” gift. A “testamentary gift” is one that is made through a will or other testamentary document.
⁃ Example: The last will and testament expresses the donative intent necessary for a transfer of property. An executor or personal representative may be charged with delivering the property in accordance with the deceased’s intent. Lastly, the recipient of the inheritance must accept the inheritance. If the intended recipient rejects the inheritance, there is no enforceable transfer of property.
⁃ Discussion: What is your opinion regarding the transfer for property by gift? Should a gift be enforceable under the law? If so, at what point should the gift or intended gift be enforceable?
⁃ Practice Question: Elsa has a beautiful dress made of satin that she rarely wears. She decides to give the dress to Ingrid. Ingrid is extremely excited to receive such a lavish gift. Before Elsa surrenders the dress, however, she changes her mind. She informs Ingrid of her change of heart without any ounce of remorse. Who is the owner of the dress before and after Elsa reneges on the promise?