Written by attorney Kevin Carmichael

Making Gifts of Real Property to Charity by Deed in Florida

Florida Statues require that in most instances real property must be made by a written instrument commonly known as a deed . Typically, deeds must be signed by the grantor of the interest in real property in the presence of two subscribing witnesses .

Fla. Stat. 725.01 "No action shall be brought whereby to charge ... any person upon any agreement ...made ... upon any contract for the sale of lands, tenements or hereditaments, or of any uncertain interest in or concerning them, or for any lease thereof for a period longer than 1 year ... unless the agreement or promise upon which such action shall be brought, or some note or memorandum thereof shall be in writing and signed by the party to be charged therewith or by some other person by her or him thereunto lawfully authorized."

The requirement of a writing is imposed by the Statute of Frauds as it exists in Florida . Under the Statute of Frauds, oral contracts for real property are unenforceable. Thus, an oral promise to make a gift of land to a charity, without a writing, is not enforceable.

Fla. Stat. 689.01 States the following:

"No estate or interest of freehold, or for a term of more than 1 year, or any uncertain interest of, in or out of any messuages, lands, tenements or hereditaments shall be created, made, granted, transferred or released in any other manner than by instrument in writing, signed in the presence of two subscribing witnesses by the party creating, making, granting, conveying, transferring or releasing such estate, interest, or term of more than 1 year, or by the party's lawfully authorized agent, unless by will and testament, or other testamentary appointment, duly made according to law; and no estate or interest, either of freehold, or of term of more than 1 year, or any uncertain interest of, in, to, or out of any messuages, lands, tenements or hereditaments, shall be assigned or surrendered unless it be by instrument signed in the presence of two subscribing witnesses by the party so assigning or surrendering, or by the party's lawfully authorized agent, or by the act and operation of law. No seal shall be necessary to give validity to any instrument executed in conformity with this section. Corporations may execute any and all conveyances in accordance with the provisions of this section or ss. 692.01 and 692.02."

Similarly, Fla. Stat. 689.06 states:

"All grants, conveyances, or assignments of trust or confidence of or in any lands, tenements, or hereditaments, or of any estate or interest therein, shall be by deed signed and delivered, in the presence of two subscribing witnesses, by the party granting, conveying, or assigning, or by the party's attorney or agent thereunto lawfully authorized, or by last will and testament duly made and executed, or else the same shall be void and of no effect."

How does this compare to the 7th Century deed below?

In 679 AD, King Hlothhere of Kent made the following deed to form a monastery (Emphasis Added):

"In the name of our Lord, the Saviour Jesus Christ. I, Hlothhere, king of the dwellers in Kent, for the salvation of my soul give the land in Thanet that is called Westana to you, Beorhtwald and to your monastery with all that belongs to it, fields, pastures, marshes, small woods, streams, fisheries, all, as has been said, belonging to this same land, just as has ever been possessed up until now, in conformity with its very well-known boundaries pointed out by me and by my procuratores. In the same way we grant to you and your monastery [that] you should hold [and] possess [it] and your successors warrant title to it in perpetuity, opposed by no one, with the agreement of Archbishop Theodore and Eadric, son of my brother, and also all the principes, just as it was given to you, so that you and your successors should hold [it]. Should anyone attempt to contravene this gift, may he be separated from all Christendom and suspended from the body and blood of our Lord Jesus Christ. In order that this charter remain likewise in its steadfastness and as a confirmation, I have imprinted the mark of the holy cross with my own hand, and have asked that witnesses should subscribe [it]. Executed in the city of Rochester in the month of May, the seventh indiction. On the same aforementioned day I added another estate in Sturry nearby, the very well-known bounds being indicated by me and by my procuratores with fields and woods and meadows, just as we recounted the above-mentioned land earlier. May that [land] so given by me in the same way with all belonging to it into the power of the abbot in perpetuity be opposed by no one, God forbid!, neither by me nor by my parents nor by others. If anyone should do otherwise, let him know that he be damned by God, and let his soul render an account to God on the Day of Judgment."

+Mark of the hand of Hlothhere, king, the donor.

(Witnesses) + Mark of the hand of Gumberht. + Mark of the hand of Gaebred. + Mark of the hand of Osfrith. + Mark of the hand of Eormenred. + Mark of the hand of AEthelmaer. + Mark of the hand of Hagana. + Mark of the hand of Ealdred. + Mark of the hand of Ealdhad. + Mark of the hand of Guthheard. + Mark of the hand of Beornheard. + Mark of the hand of Welhisc.

Note that the requirements we presently have for deeds are little changed from the 7th Century. In the deed above, there is a Grantor, a grantee charity, a description of the land, warranties of title, signature by the grantor and witnesses to the grant.

Promises to make a Gift of Real Property-Enforcement by Estoppel What if a donor makes a pledge to transfer land and reneges on the gift?

In Florida, charitable pledges may be enforceable where they are stated with particularity under a theory of Promissory Estoppel . In order for a charity to recover it they will need a written pledge agreement which may be required to be signed by the same formalities necessary to convey real property.

Basic Tax Principles Applicable to Charitable Transfers

The Federal Income Tax and the Federal Gift Tax are very different taxes and follow very different principles. The Federal Income tax is a tax on accessions to wealth and is imposed annual on the net income earned by a taxpayer. The Federal Gift and Estate tax is an excise tax on the right to transfer property and is accessed at the moment of transfer at the fair market value of the transfer.

Income Tax Principles

From an income tax perspective the principal elements of a gift are: (1) an intention on the part of the donor to absolutely and irrevocably divest himself of the title, dominion and control of the subject at the very time he undertakes to make the gift; (2) the irrevocable transfer of the present title, dominion and control of the thing given by the donor; and (3) the delivery, by the donor to the donee, of the subject of the gift or of the most effectual means of commanding the dominion of it . While this definition is close to the previously stated Intent delivery and acceptance standard, note the additional language related to "dominion and control." The donor must irrevocably part with the party conveyed for a gift to occur. No part of the bundle of rights may be retained as to the portion of the property conveyed. If rights in property are retained the gift may not be complete and may still be considered owned by the donor. For example, the loan of a painting to an art museum for ten years does not constitute the complete divestment of title and dominion by the donor.

The seminal income tax case is Commissioner v. Duberstein . The Supreme Court in Duberstein espoused a number of very important Income Tax principles. First, a transfer is not a gift if transfer occurred due to some form of incentive or economic benefit. Second, a transfer is not a gift if it proceeded as a result of coercion or a moral or legal duty. Instead, for a gift to be present, the donor must make the transfer to the donee out of a sense of a detached and disinterested generosity which resulted from impulses of charity, affection, respect, admiration or like impulses; in essence expecting nothing in return. In construing gifts from an income tax perspective courts look to the Donor's primary or dominant intent in making the transfer.

Gift Tax Principles

The existence of a gift for gift tax purposes is wholly different. Under the Gift Tax rules, the donor's intent is irrelevant. The Gift tax taxes all transfers made by a donor for less than full and adequate consideration. The value of the property rights conveyed at the time of the release of dominion and control over property is what controls. Since value is involved, the starting point in determining a gift is measuring the consideration, if any, that is received in a transfer. If full and adequate consideration is received in a conveyance of property, there is no gift; however, once a transfer is made for less than full and adequate consideration we begin to measure a gift. The gift is measured by the difference between what has been conveyed and what has been received. Where the value of the property received exceeds the consideration exchanged, if any, the result is a gift. Summary To summarize, in analyzing transfers of real property to charity we need to recognize the bundle of rights which is being transferred. We must pay careful attention to whether we are transferring horizontal or vertical slices of property. We must look at the formalities of the transfer, for example whether a properly executed deed has been made. In addition, we must look at the donor's intent and the value of the consideration exchanged in the transaction. We must ensure that the donor has relinquished full dominion and control over the rights conveyed. Finally, we must determine the tax effects of the transfer.

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