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Retrieving an Improvident Gift

The classic components of a gift require: (1) delivery; (2) acceptance; and (3) a donative intent.
In a gift transactions between people that have a special or confidential relationship, the burden of proof is placed upon the person who has received the gift (Donee), to show affirmatively not only that there was no deception, but also, that there was no undue influence used on the person who made the gift (Donor), and that the transaction was fair, open, voluntary and well understood by the Donor. In those cases where a confidential or special relationship is found each of these factual considerations must be proven by clear and convincing evidence which is the highest standard of proof required in any civil case. If there is any doubt in the judicial mind the analysis of the issue must be resolved against the Donee. The New Jersey Supreme Count has said that the reason for the rule was:

...not so much to afford protection to the Donor against the consequences of undue influence exercised over him by the donee, as it is to afford him protection against the consequences of voluntary action on his part, induced by the existence of the relationship between them, the effect of which upon his own interests he may only partially understand or appreciate. In our judgment, whenever it appears that the relations between the parties to an inter vivos gift are of such character that in reasonable probability they do not deal with each other on terms of equality because one has given friendship and justifiably reposes confidence in the other, that on the donee's side superior knowledge exists as to the nature of the transaction proposed by him, as well as the detriment to be suffered by the Donor if he engages in it, and the donee fails to see to it that the Donor thoroughly understands its nature and consequences, equity should regard it as voidable at the insistence of the Donor or his representatives. In such a situation the donee must show by explicit and convincing evidence that the Donor intended to make a present gift and unmistakably intended to relinquish permanently the ownership of the subject gift. (Emphasis Supplied).

For the purpose of determining whether the Donee had a special or confidential relationip with the Donor, recent court decisions merely require proof that the Donor has placed some trust in the Donee in the handling of his/her affairs. Physical or psychological dominance is not required. Indeed, a confidential or special relationship can exist, even though the Donor was an experienced and shrewd businessman who was possessed of “confidence” and “vigor.”

One of the most natural of confidential relationships is that of parent and child. Resultantly, a child who receives a gift may be required to show, by clear and convincing evidence, that the purported gift was not subject of any deception or undue influence, and that it was fair, open, voluntary and well understood. Moreover, if the Donor is frail in body and/or spirit at the time of the purported gift, a relative who is the beneficiary of the gift may have a significant hurdle to overcome if the transaction is tested. Indeed, when the potential of the relative's influence on the gift-giver is viewed from the prism of a donor’s old age and its attendant infirmities, the deficiencies of the purported gift will be scrutinized carefully by the courts.

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