An inter vivos gift is a transfer of property from one living person to another, made voluntarily and without payment in return. The phrase is Latin for “between the living,” and that timing is what defines it: ownership passes immediately, while both the giver and the recipient are alive. Once complete, the transfer is generally irrevocable. That permanence carries real legal and tax consequences worth understanding before you sign the deed, hand over the keys, or transfer the shares.
The Three Elements That Make a Gift Valid
Courts apply the same basic test to decide whether a gift actually happened. Three elements must be present. Miss one and no valid gift occurred, which means ownership never changed hands at all.
Donative Intent
The donor must intend to transfer ownership now, not at some point in the future. A promise to give someone your car next year is not a gift. It is at most an unenforceable promise, because gifts by definition lack the consideration that would make a contract binding. Courts look at what the donor said and did at the time of the transfer. Telling your nephew “this is yours now” while handing him a check clears the bar. Saying “I’ll put you in my will” does not.
Delivery
The donor must give up possession and control. For something you can physically hand over, actual delivery is straightforward. When the property is too large or impractical to hand across a room, the law recognizes two substitutes. Symbolic delivery means handing over something that represents the property, like a car key. Constructive delivery means providing the means to access it, such as a safe combination or adding a name to a bank account. In every case the point is the same: the donor must relinquish dominion.
Acceptance
The recipient must accept the gift. When the gift has clear value, courts presume acceptance, and that presumption is overcome only by an explicit refusal. Someone might refuse a gift that comes with strings attached, ongoing costs, or potential liability.
Why the Gift Is Irrevocable, and When It Can Still Be Challenged
Once all three elements are satisfied, the gift is done. You cannot change your mind and demand the property back. This is where people get tripped up. Handing your daughter a painting while saying “take care of this for me” is ambiguous enough that a court might find no gift occurred. Handing it to her with no conditions attached means it is hers.
A completed gift can still be attacked if one of the required elements was never truly present. The common grounds are:
- Lack of mental capacity. The donor did not understand what they were giving away or the effect of the transfer.
- Undue influence. Someone in a position of trust pressured the donor into making the gift.
- Fraud. The donor was deceived about what they were signing or transferring.
- Duress. The donor was coerced through threats or force.
- Unmet conditions. If a gift was explicitly conditioned on something happening and that condition was never satisfied, the gift may fail.
A challenge based on capacity or undue influence is not simply voidable at the donor’s option. If a court finds the donor lacked capacity, the gift was void from the start and never legally existed.
How It Differs From Deathbed and Testamentary Gifts
A gift causa mortis is made by someone who believes they are about to die from a specific threat. It uses the same three elements but adds a fourth: anticipation of imminent death. It is also conditional. If the donor survives the peril, most states treat the gift as automatically revoked, and the donor can reclaim the property any time before death. An inter vivos gift, by contrast, is final the moment it is complete.
A testamentary gift takes effect only when the donor dies, usually through a will. Because nothing transfers during the donor’s lifetime, testamentary gifts are freely revocable. You can rewrite your will as many times as you want. The trade-off is probate, which can be slow and expensive. Inter vivos gifts bypass probate entirely because ownership already changed hands while the donor was alive.
Federal Gift Tax Rules
The IRS taxes transfers of property by gift, and the donor is the one responsible for paying any tax owed. In practice, most people never actually owe gift tax because of two layers of protection.
The Annual Exclusion
For 2026, you can give up to $19,000 per recipient per year without triggering any gift tax or reporting requirement. There is no cap on how many people you can give to. Three children means three $19,000 gifts, and no tax. Married couples can combine their exclusions through gift splitting, allowing up to $38,000 per recipient per year, though both spouses must consent and each must file a gift tax return.
The Lifetime Exemption
Gifts that exceed the annual exclusion count against your lifetime gift and estate tax exemption, which is $15,000,000 per individual for 2026. That amount was set by the One, Big, Beautiful Bill, signed into law on July 4, 2025. You only owe gift tax after exhausting both the annual exclusion and the full lifetime exemption. The top federal gift tax rate is 40%.
Filing Form 709
You must file IRS Form 709 if you give more than $19,000 to any single recipient in a calendar year, if you and your spouse elect to split gifts, or if you give anyone a future interest, meaning a gift the recipient cannot use or benefit from until a later date. The return is due by April 15 of the year following the gift. Even when no tax is owed, the return documents how much of your lifetime exemption you have used.
The Cost Basis Trap
Here is where lifetime gifts can cost the recipient real money compared to receiving the same property as an inheritance. When you receive a gift, you take on the donor’s original cost basis. If your mother bought stock for $10,000 and gives it to you when it is worth $100,000, your basis is $10,000. Sell it the next day and you owe capital gains tax on $90,000 of gain.
Had your mother left you that same stock through her will, you would receive a stepped-up basis equal to the fair market value on the date of her death. If the stock was worth $100,000 when she passed, your basis would be $100,000, and selling immediately would produce zero taxable gain. The difference can be enormous for appreciated assets like real estate or long-held investments. For high-value property, the carryover basis rule sometimes makes it better to inherit than to receive a lifetime gift, even accounting for probate costs.
Gifts of Real Estate
Gifting real property requires more formality than handing over keys. The donor must execute a deed transferring the property to the recipient. Most states require the deed to be notarized and recorded with the local county office to be effective against third parties. A gift of real estate worth more than $19,000 also triggers the Form 709 filing requirement, and the donor should obtain an appraisal to establish fair market value for tax reporting. Because real property often carries a low original basis and significant appreciation, the carryover basis issue hits especially hard with gifted homes and land.
Gifts to Minors
You can make a lifetime gift to a child, but minors cannot legally manage property on their own. The Uniform Transfers to Minors Act, adopted in some form by nearly every state, lets you transfer assets to a custodian who manages them on the child’s behalf. The custodian has a fiduciary duty to invest prudently and act in the child’s best interest. When the child reaches the age specified by state law, usually between 18 and 21, the custodial account terminates and the assets belong to the child outright. Contributions are irrevocable, so the donor cannot reclaim the funds.
For larger transfers, families sometimes use trusts, which offer more control over when and how the beneficiary receives the assets. Either way, the same gift tax rules apply: amounts exceeding $19,000 per year per child count against the donor’s lifetime exemption.