An example of a romantic gift is a recently widowed man agrees to purchase his lady friend a Range Rover costing $75,000. The agreement was that upon receipt of the gift, they would cohabitate as an unmarried loving couple. Upon delivery of the Range Rover, she did not fulfill her agreement for an undisclosed reason. Attorneys for the man later reviewed the case data and concluded the vehicle was a conditional romantic gift and since there was unjust enrichment and no valid reason for her canceling the agreement for cohabitation, the gift is revocable and the vehicle should be returned to the donor.
There is a general misunderstanding in the general public regarding the status of gifts. To be a gift there are three elements that must exist:
- Intent to make the gift.
- Delivery of the gift.
- Acceptance of the gift.
Most people are familiar with "unconditional gifts"-these include birthday gifts, anniversary gifts, and gifts made for no reason at all. These gifts are not revocable if all of the three elements of a gift exist.
On the other hand, most people are not familiar with "conditional gifts," which do not happen with the same frequency. Conditional gifts have the same three elements but a fourth element is added, which we'll call, "Conditions associated with the gift."
Texas law applies the conditional gift rule, which means an engagement ring is a conditional gift given in contemplation of marriage. The conditional gift rule, as applied by Texas courts, contains an "element of fault." The Texas courts will look to determine which person is at fault for breaking the engagement.
In 1997, the Texas Legislature added section 1.108 to the Texas Family Code that states:
"A promise or agreement in consideration of marriage or nonmarital conjugal cohabitation is not enforceable unless the promise or agreement or a memorandum of the promise or agreement is in writing and signed by the person obligated by the promise or agreement."
Although section 1.108 was obviously intended to apply to prenuptial agreements, its plain language is broad enough to include Curtis V. Anderson, 106 SW3rd 251, (Tex.App. 203) Michael Curtis terminated his marriage engagement with Michele Anderson and Curtis asked for his ring be returned. Anderson refused and Curtis sued arguing that the ring was a conditional gift and the contingent condition of marriage was not met-the gift was not completed and the ring should be returned to him. The Appeal Court found for Michele Anderson since Michael Curtis was at fault when he terminated the engagement.
An engagement ring is a special symbol in our culture. It is traditionally given by a man to a woman upon the woman's acceptance of the man's proposal of marriage. It is a symbol of the couple's engagement and their mutual agreement to marry.
The Conditional-Gift Rule
In absence of an enforceable agreement, the conditional-gift rule comes into play.
As previously stated the conditional-gift rule contains an element of fault. Texas courts have held that the rule operates to require that the ring may be returned to the donor if the recipient donee is at fault in the termination, (McLain v. Gilliam 389 S.W. 2nd 131 (Tex. Civil .Appeals.-Eastland 1965).
The Harvard Law School Discussion Paper No. 43 addresses Romantic Gifts as follows:
With respect to romantic gifts the courts have developed five theories that address romantic gifts regarding the manner in which the courts deal with conditional wedding rings. These five theories are:
- Conditional Gifts
- Pledge Gifts
- Consideration or Promise
- Unjust Enrichment
- Civil Fraud
Within these theories, there is a "gold diggers" label, which is a person that takes monetary advantage of their significant other. Generally, gold diggers promise items in return for money or gifts. If it is determined the party was a gold digger, then punitive damages may apply. In addition, the courts look at unjust enrichment in making a determination of whether or not the gift is revocable. Unjust enrichment is determined by what was given, the circumstances surrounding the gift, and what was provided in return.
The romantic gift is a developing area of the law and appears to be treated as Conditional Gifts, which may be revocable.
In summary, when gifts are made between couples for marriage or cohabitation, the circumstances surrounding the gift needs to be investigated to determine if the gift may be revocable.
Sage Investigations provides litigation support based on over 40 years of experience and can investigate conditional and unconditional gift matters to help develop the full picture for its clients. Learn more about assisting your clients by contacting Retired IRS Special Agent Edmond J. Martin, Chief Investigator at Sage Investigations, LLC. Email
or call 512-659-3179. Thanks to Kenneth Huff, CPA his input for this article.