Gift Agreement: Content, Conditions, and Limits of Validity
A gift agreement is a contract under which one party (the donor) transfers property or a property right (claim) to another party (the donee) free of charge, granting ownership or releasing the donee from a financial obligation to the donor or a third party. Under such an agreement, it is possible to transfer not only property (movable or immovable assets, money, etc.) to another person’s ownership. The subject of a gift agreement may also be a property right (claim) or the release of the donee from a financial obligation to the donor or a third party.
However, it is not allowed to gift property that does not exist at the time of the contract or that will only be created in the future — such a gift agreement is invalid. Moreover, a promise to gift property or a property right or to release someone from a financial obligation in the future is not considered a valid gift agreement.
The essential feature of a gift agreement is its gratuitous nature. The donor transfers property or a property right (claim) to the donee or releases the donee from a financial obligation without compensation.
Conditions and Limitations of Validity
A gift agreement that grants the donor the right to unilaterally reclaim the gifted property or property right is invalid. Likewise, a contract stating that ownership of the gift will pass to the donee after the donor’s death is void. In such cases, inheritance law regulations apply.
If both parties to the agreement transfer certain property, property rights, or counter-obligations to each other, such a contract is not considered a gift agreement.
A gift agreement is invalid if the donor was not the owner of the gifted property or was not properly authorized to conclude such an agreement.
The agreement may also be declared invalid at the request of the donor or their heirs if, at the time of conclusion, the donor was suffering from a serious incurable illness that prevented them from expressing their true will.
Property held in joint ownership may be gifted only with the written consent of all co-owners.
When making a gift, the donor may set a condition that the property must be used for a specific purpose, provided that the rights and legitimate interests of other persons are not violated. If the donee fails to comply with the condition set in the gift agreement, the donor has the right to request in court either the enforcement of the condition or the annulment of the agreement and the return of the property.
Form of a Gift Agreement, Capacity of the Parties, and Legal Restrictions
The legislation sets out several requirements regarding the form of a gift agreement. When the value of the gift exceeds five thousand litas, the agreement must be made in writing. If the gift involves immovable property or the value exceeds fifty thousand litas, the agreement must be notarized.
A donor cannot be a legally incapacitated person. The guardian of an incapacitated person is prohibited from gifting that person’s property on their behalf, except for symbolic gifts whose value does not exceed the amount of one minimum standard of living. Gifts intended for an incapacitated person may be accepted only by their guardian, except for symbolic gifts whose value does not exceed the same threshold.
The law also imposes restrictions on who may accept gifts. Managers and other employees of healthcare, treatment, or care institutions are prohibited from accepting gifts from persons who are treated or maintained in these institutions, as well as from their close relatives, except for symbolic gifts whose value does not exceed one minimum standard of living. Politicians, state officials, municipal officials, and other civil servants, as well as their close relatives, are also prohibited from accepting gifts if the gifts are related to their official position or duties.
Conditions of the Gift Agreement, Liability, and Grounds for Revocation
The property transferred by the donor under a gift agreement must be free of any encumbrances that would prevent the donee from using, disposing of, or possessing it. However, such encumbrances may exist if they are clearly agreed upon by the parties in the gift agreement. The donor is not liable for hidden defects in the gifted property if the donor did not know and was not expected to know about them. The donee may claim compensation for losses if they incur expenses related to removing legal restrictions on the property or eliminating its defects, and the donor, knowing or being expected to know about such restrictions or defects, failed to inform the donee.
If the conclusion or execution of the gift agreement in the Republic of Lithuania involves certain expenses, they must be borne by the donor, unless otherwise stipulated in the agreement. Unless otherwise provided by law or the agreement, the donee is liable only for those debts of the donor that are inseparably linked to the gifted property.
The donor has the right to apply to the court in Lithuania to revoke the gift if the donee attempts to take the donor’s or the donor’s close relatives’ life, or intentionally inflicts serious bodily harm. Revocation is also possible when, considering the nature of the gift, the personal qualities of the parties, and their relationship, the donee performs actions toward the donor that are clearly and severely condemned by good moral standards. If the donee intentionally kills the donor, the right to file a claim for revocation passes to the donor’s heirs. The donor may also request revocation if the donee treats the gifted property, which has significant non-material value to the donor, in a way that creates a real risk of its loss. When a gift is revoked, the donee is obliged to return the gifted property if it still exists at the time of revocation.