Georgia law establishes a presumption of a gift when one spouse transfers legal title to real or personal property to the other spouse or to the marital unit. In other words, property acquired by one spouse prior to marriage (or through gift or inheritance from third-parties during the marriage), which is conveyed to the other spouse during the marriage, will be presumed the separate property of the recipient spouse on divorce. Or if conveyed to the marital unit, such property will be presumed on divorce to constitute a marital asset subject to equitable division.(1) Rebutting the presumption requires clear and convincing evidence that the transferor did not intend to make a gift to the recipient.(2) This article explores the evidence which may or may not suffice to rebut the presumption of a gift.
A valid gift under Georgia law has three requisite components: the donor must intend to give the gift; the donee must accept the gift; and the gift must be delivered or some act which under law is accepted as a substitute for delivery must be done.(3) The intention of the parties at the time of the transaction determines whether a gift was made.(4)
Obviously, a written agreement signed by the parties at the time of the transfer, specifying an intent other than a gift, represents the most obvious, strongest means for rebutting the presumption of a gift to the recipient spouse/marital unit. The contract, for example, could evidence a loan from the transferor to the transferee or establish that the grantee will hold the property in trust for the grantor, either of which purposes should rebut the presumption of a gift.(5)
Absent a written contract, evidence to rebut the presumption can consist of parol evidence of either a) an expressed understanding for a non-gift conveyance, or b) an implicit understanding shown by the nature of the transaction, or the circumstances or the conduct of the parties, at the time the transaction was consummated.(6) As to the latter, evidence of a course of conduct regarding prior business transactions between spouses may suffice to rebut the presumption of a gift. In one case, for example, evidence of a husband’s course of dealing created a jury issue as to whether stock purchased by him but placed in the name of his wife constituted a gift or resulting trust. Husband’s evidence included i) his testimony that he had handled all of the family’s investments, his wife always had signed necessary papers without question when something was to be placed in her name, and he always had paid gift taxes on gifts made to his wife but did not pay gift tax on the subject stock because no gift was intended, ii) the wife’s testimony that she signed anything her husband put in front of her and did not know why the stock was put in her name, and iii) an accountant’s testimony establishing that husband had paid for the stock.(7)
Without evidence that a donor conveyed to his/her spouse, by way of an understanding or agreement, that the donor intended to retain ownership of property titled in the name of the other spouse or jointly in the names of both spouses, the donor-spouse’s testimony of such intent will not suffice to rebut the presumption that a gift was intended.(8)
(1) Coe v. Coe, 285 Ga. 863, 864-865(1), 684 S.E.2d 598 (2009); Lerch v. Lerch, 278 Ga. 885, 608 S.E.2d 223 (2005); and O.C.G.A. § 53-12-131(c). See also McArthur v. McArthur, 256 Ga. 762, 763-7664, 353 S.E.2d 486 (1987).
(2) Brock v. Brock, 279 Ga. 119, 120(1), 610 S.E.2d 29 (2005); Talmadge v. Talmadge, 241 Ga. 609, 247 S.E.2d 61 (1978); O.C.G.A. § 53-12-131(c).
(3) O.C.G.A. § 44-5-80.
(4) Brock, supra, 279 Ga. at 120; Talmadge, supra, 241 Ga. at 610(2); and Scales v. Scales, 235 Ga. 509, 510, 220 S.E.2d 267 (1975).
(5) See generally Brock, supra, 279 Ga. at 119(1); Scales, supra, 235 Ga. at 510; O.C.G.A. § 53-12-131(a); and O.C.G.A. § 44-5-84.
(6) Scales, supra, 235 Ga. at 510; and O.C.G.A. § 44-5-84.
(7) Talmadge, supra, 241 Ga. at 610(2).
(8) Brock, supra, 279 Ga. at 119-120(1); Ford v. Ford, 243 Ga. 763, 764-765, 256 S.E.2d 446 (1979); Scales, supra, 235 Ga. at 510-511.