The answer to this question is straightforward.
No. Once a gift deed is given to someone in Texas it cannot be revoked. Once the gift is given, it is the sole property of the person who received the gift deed, also known as the “donee”.
That being said, there are cases where the gift deed can be revoked. If it is believed that the gift deed was given under force or due to the threat of fraud, one can petition that the gift deed is null and void.
Table of Contents
- What Constitutes a Gift Deed in Texas?
- Transferring Deeds in Texas
- Gift Deeds in General
- Texas General Warranty Gift Deeds
- The Gifting of Real Estate
- Texas Requirements for Gift Deeds
- Gift Taxes
- IRS and Gift Taxes
- Texas Gift Deeds
- Validity of Texas Gift Deeds
- Before Executing a Gift Deed
- Some Examples of Gift Deed Cases
What Constitutes a Gift Deed in Texas?
A gift deed is a legal document that transfers real estate to someone else. This can be a gift to an individual or to an organization such as a charity or a church.
Transferring Deeds in Texas
The most important point with Gift Deeds is that the ownership of a property is done without receiving any compensation or exchange of other property or monies.
It’s a gift, pure and simple. Most Texas real estate transfers involve some commodity such as money or services.
When there is transfer is done without any money or benefits, it’s a simple Gift Deed and the property is free.
Gift Deeds in General
Gift deeds are made while the property owner is alive. This makes them different from a will or Transfer on Death Deed.
The Gift Deed needs to be signed in front of a notary public and filled at the country clerk’s office in the county the property is located.
With few rare exceptions, the Gift Deed cannot be revoked. The person who receives the house or the land has the option to transfer it back to the original owner if they decide to.
This and situations of fraud or undue force to make the transfer are the only ways that the Gift Deed can be revoked.
Texas General Warranty Gift Deeds
In Texas, a gift deed can be a Special Warranty Deed or a General Warranty Deed. Either document must state that the transfer of property is a gift.
The deed needs to be written and signed in front of a notary public by the person initiating the transfer.
Then the document is filed at the country clerk’s office where the said real estate, house, or building is located.
The transfer costs approximately $30–40 for the filing fee. Once the document is signed appropriately, notarized, and filed, the ownership transfer is complete.
This process is similar to the transfer of other deeds.
The Gifting of Real Estate
While giving someone a house, land or a building for nothing may seem unusual, it is common among family members.
For instance, a property owner may give property to their spouse or children. No one pays as it is truly a gift.
The process for transferring property as a Gift Deed to a family member is the same as giving it to a friend.
As long as all the requirements are met, the deed is transferred from one person to another.
Texas Requirements for Gift Deeds
Gift Deeds are similar to other types of deeds, meaning that there are certain requirements that must be met.
In Texas, the requirements are:
- The Gift Deed must be in writing and signed in front of a notary public.
- The property must be accurately described.
- The document must list the name and address of the current owner, as well as the statement of bestowing the property to the new owner.
The new owner will now be responsible for the property taxes on the real estate. The county clerk and the county tax offices will make the changes in the deed and tax records.
The new owner will also be responsible for insuring the property.
Before you gift a deed to anyone other than your spouse, it’s wise to consult a tax advisor about any gift taxes.
Gift taxes are not the responsibility of the person giving the property but rather the person receiving it.
There could be tax considerations that make the Gift Deed an unwise choice.
IRS and Gift Taxes
The IRS is very clear on who pays the gift tax. They say that the person who receives the property is responsible for paying the taxes on it.
They also recommend that you talk with your financial and tax adviser when creating this type of exchange.
The IRS further states that a gift is a transfer from one person to another where no return is received.
This notes that the value of the property can be measured in “money or money’s worth”.
Texas Gift Deeds
In Texas, while there are similarities between regular deeds and gift deeds, the document must clearly transfer property to another person or organization.
While the transfer can be handled informally, it must be clear the giver intends to be divested of the property and retain no control over the property.
Validity of Texas Gift Deeds
As mentioned, the legal document must be in writing, signed before a notary public and filed with the county clerk’s office.
Texas regulations also require that the document set out the grantor’s intent, the actual transfer of the property to the grantee and that the gift deed is acceptable to the grantee.
The individual transferring the property through Gift Deed is responsible for ensuring that each step is completed appropriately.
Once completed, they release all control and dominion of the property.
Before Executing a Gift Deed
It’s good to consult with a tax professional regarding the gift tax implications. It is also good to understand Texas inheritance laws.
It’s also beneficial to understand the types of properties that are involved in probate, particularly if you are gifting the property to your children.
If someone claims to have property through a gift deed that is really yours, contact your attorney as soon as possible.
Some Examples of Gift Deed Cases
The first example includes a case where the issue of a gift deed of some oil and gas deeds was in question.
If it were truly a Gift Deed, the recipient would own the new property. There were several mitigating circumstances though.
The deal involved individuals dying without wills, multiple parties, and old deeds. The confusion came when the people involved died childless and without proper wills.
In this case, the mineral rights would be transferred to the remaining spouse and heirs if it was not a true Gift Deed.
If it was determined that it was a true Gift Deed, the property rights would go to the husband’s remaining heirs.
When the courts considered the situation, it was discovered that the mineral rights were sold for $10 along with other goods and items.
This made it not a Gift Deed.
Gift Deed Case Two Example
Another case happened in 2021 where the court of appeals reviewed a Gift Deed. It had been acknowledged and filed at the country clerk’s office with the belief that the original owner fully intended to transfer tangible property.
The courts overturned this case when proof was provided that the document was created for other purposes including accident, mistake, or potential fraud.
Gift Deed Case Three Example
Another case in Texas in 2018 involved a problem with a family Gift Deed. A transfer like this involves a separate property that is given to another person.
Most Gift Deeds cite that they are given with “love and affection”. If any monetary transactions occur, even $10, then it is placed in another category such as “community property”.
In this case, the property was transferred to another family member for “the consideration of the sum of ten and no/100 dollars”.
The beneficiary of the property claimed that the transfer was in actuality a Gift Deed and not the purchase of the property.
To make her claim, she had her relative, the grantor, testify that it was a Gift Deed and not a purchase deed.
The crux of the matter was that if it were a Gift Deed, she would ultimately inherit the property. If it wasn’t a Gift Deed and really a purchased deed, she wouldn’t inherit the property.
Ultimately, the court ruled that because the deeds were clear and that they were sold for $10, they were not Gift Deeds, and no further testimony was allowed.
Gift Deed Case Four Example
In 2021, a father died leaving all of his property in Van Zandt County, Texas to his son. Now as the sole owner of the property, it was not deemed to be community property.
After receiving the deed from the executor of his father’s estate, he decided to gift the property to his niece.
Subsequently, the son died, and his wife became the executor of his estate. She moved to revoke the Gift Deed as the son hadn’t received the deed by the time of his death.
On reviewing the information, the court disagreed and upheld the original Gift Deed.
The court stated that the property, as outlined in the will, will be transferred on the person’s death.
The bottom line was that the Gift Deed was handled accurately and that on his father’s death, the son owned the property and could divest of it as he saw fit.
Gift Deed Case Five Example
In this last example, a case was brought before the San Antonio court of appeals requesting a decision on a Gift Deed.
Two people owning a home created a document stating that the house in question would be evenly owned by their grandchildren.
The courts questioned the donor’s intent when creating the document.
This is a key point with Gift Deeds. The documents must clearly show that the original owner intends to unconditionally divest themselves of any ownership interest properly in order to transfer it to another.
Without this, there is the potential of the original owner revoking the gift.
In the court’s opinion, they believed the document lacked an intent to donate the property. The court further stated that they agreed that the house in question should be evenly owned by all the grandchildren.
They also stated that the documents presented to them showed that the owner intended to transfer the property’s ownership to the grandchildren upon their death.
However, the documents did not state that the transfer of property and rights would happen immediately.
The final decision of the court was that the will, dated March 11, 2005, did not divest the current owner of their title or control of the property in question until the time of their death.
Later, the court reversed itself during court proceedings. They ruled that the document presented to them was in fact a Gift Deed.
Gift Deeds are given for a wide range of reasons. Most are altruistic or made for financial reasons.
They can be called into question, however, if matters are not handled correctly there can be issues.
If you decide to create a Gift Deed for a family member or colleague, be sure to get advice from your financial adviser and attorney to ensure that it is a good step to take.