Welch v. Dececco, — So.3d —-, 2012 WL 5969623 (Fla. 5th DCA November 30, 2012)

When and “if” a gift actually occurs can be a tricky, fact-intensive issue to decide. A few years ago I wrote here about a contested gift by former major league ball player Dennis L. Rasmussen to his ex-wife. This time around the case involves an alleged gift of Exxon-Mobil stock by a man to his nephew. After uncle’s death nephew claimed the stock. One problem, the stock certificate remained registered in uncle’s name at the time of his death. As far as the probate judge was concerned, this one fact decided the case: nephew loses. Not so fast says the 5th DCA.

Inter vivos gift of stock does NOT automatically fail if stock remained registered in donor’s name at death:

Gifts are a function of “donative intent,” and just because the stock remained registered in uncle’s name at the time of his death doesn’t automatically mean he didn’t intend to gift it to nephew. Case reversed, here’s why:

In this probate matter, Frank Welch appeals the trial court’s order determining that ExxonMobil stocks had not been transferred to him by his uncle, Frank Kolbl, via inter vivos gift and, thus, belonged to Kolbl’s estate. Because it is unclear from the order whether the court considered all the relevant evidence in arriving at this ruling, we reverse and remand for the trial court to clarify the basis of its ruling.

The elements of an inter vivos gift are present donative intent, delivery, and acceptance. See Mulato v. Mulato, 705 So.2d 57, 61 (Fla. 4th DCA 1997). Here, the trial court concluded that Welch failed to prove present donative intent, and that the evidence showed, at best, a failed testamentary intent. The court cited the fact that the stocks were still registered in Kolbl’s name at his death. Although stock registration is properly considered in analyzing donative intent, it is not necessarily dispositive where, as here, other evidence is presented for and against such intent. See id. at 59–60, 62; Freedman v. Freedman, 345 So.2d 834, 836–37 (Fla. 3d DCA 1977); Sullivan v. American Tel. & Tel. Co., 230 So.2d 18, 18–21 (Fla. 4th DCA 1969); Kuebler v. Kuebler, 131 So.2d 211, 212–16, 218–19 (Fla. 2d DCA 1961); Eulette v. Merrill Lynch, Pierce, Fenner and Beane, 101 So.2d 603, 604–05 (Fla. 3d DCA 1958). It is unclear from the trial court’s order whether the court focused exclusively on the stock registration, or properly considered it as one fact along with all the other evidence relevant to donative intent.

Accordingly, we reverse and remand this matter for the trial court to clarify whether it considered all the relevant evidence, and if not, to reconsider its ruling on the basis of the evidence presented.

When is a gift of stock complete for tax purposes?

It’s impossible to predict with 100% certainty if your particular probate judge is going to consider the particular facts of your specific case and conclude the three elements of a completed gift have been proven: “present donative intent, delivery, and acceptance.” One way to give your judge some guidance (and your client some sense of how weak or strong his case is) is to look to the detailed regulations and common law developed in the tax context for determining when a gift of stock is complete. If under the facts of your case the gift would have been complete for tax purposes, that’s a powerful argument for the same conclusion as a matter of state law, and vice versa. Charities make it their business to put this kind of information on the web for potential donors of stock, so it’s easily accessible if you know what you’re looking for. See here, here, here and here for examples.