Donative intent is a
phrase used to describe the situation where a transfer of property is made as a
gift. Simply put, it is an intent to gift. Someone is said to have donative
intent if they give something of value to someone else and do not expect the
property returned and do not expect some other property to be given in exchange
for the transfer. Oftentimes, people give or exchange property without
preparing a document to describe or “classify” the transaction. When my son
asks for $20 to buy gas for his car, I don’t typically prepare a document to
describe whether I am making a gift or a loan. In the context of a decedent’s
estate, this situation can become problematic because the person making the gift
or the loan is no longer available to tell us what they intended. Questions
often arise in decedent’s estates whether a particular transaction was a gift
or a loan. If the decedent wrote a check to a neighbor, friend, or even a
girlfriend/boyfriend for $50,000 and no further documentation was available
regarding that matter, should the estate seek to recover the funds as an unpaid
loan or abandon the money as a prior gift. In Illinois, the law presumes that a
payment to a family member is a gift and that a payment to non-family members
is a loan. These presumptions are rebuttable – meaning that they can be
overcome with specific testimony or evidence. Illinois law provides a
rebuttable presumption of donative intent where the donor is a parent and the
donee is his or her child. Jackson v. DBR
Jackson Partnership, 2016 IL App (3d) 150229 (2016), 70 N.E.3d 641, 410
Ill.Dec. 514, citing Moore v. Moore, 9
Ill.2d556, 138 N.E.2d 562 (1956). The
law, however, does not presume a gift if someone transfers property to a
friend, even a close friend. Barnes v.
Michalski, 399 Ill.App.3d 254, 925 N.E.2d 323, 338 Ill.Dec. 826 (4th
Dist. 2010), citing Bowman v. Pettersen, 410
Ill. 519, 102 N.E.2d 787 (1951); Hall v.
Eaton, 258 Ill.App.3d 893, 631 N.E.2d 833 (1994). In the context of
handling a decedent’s estate, if the decedent made a payment to a non-family
member, and the decedent was not paying a debt owed to that person at the time,
then that payment will be deemed a loan unless the recipient can prove all the
elements of a gift by clear and convincing evidence, including donative intent.
For further reading on this topic, one should reference 38 Am.Jur.2d, §92. As
is true with many legal issues arising in a decedent’s estate, it is wise to be
familiar with the evidentiary restrictions imposed by the Dead Man’s Act.
