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Staton v. Person

C-189-04 (N.J. Super. Ch. Div. 2005) (Unpublished)

GIFTS; CONSTRUCTIVE TRUSTS—A parent who transfers property to one of many children without meeting the four requirements of a gift transfer creates a constructive trust for all of the children.

Prior to her death, a mother of four transferred her home to one of her daughters by deed. After the transfer, the daughter began to take care of the home. Her mother was ill. The daughter collected rents from all of the tenants and paid for home repairs from the money she received in rent. At no time did the daughter pay for the maintenance or repair of the home with her own money. Before and after her mother’s death, the daughter repeatedly told her three siblings that she was going to sell the home and divide the proceeds with them. After the mother died, the daughter decided that she was no longer going to sell the home and split the profits with her siblings. Instead, she decided to keep the property for herself. She then successfully evicted one of her brothers from the home. He had been living there for over ten years. Her three siblings filed an action against her to have the deed for the property declared a constructive trust under which all four siblings would share equally. In response, the daughter on the deed argued that the property was a gift from her mother and that her siblings were not entitled to share in the gift. Shortly before litigation began, she sold the property and kept all of the proceeds.

The Chancery Division ruled that the proceeds from the sale of the home were to be held in a constructive trust for the benefit of all four children. In doing so, the Court set forth the requirements that must be present in order for the property to have been considered a gift. It held that valid gifting must have four elements as follows: (1) an act constituting an actual or symbolic delivery of the subject matter of the gift; (2) an intent to give; (3) an acceptance of the gift; and (4) the donor’s relinquishment of ownership and dominion over the subject matter of the gift. The Court held that all of the elements were present in the conveyance of the property from the mother to the daughter with the exception of the second element. The Court ruled that there was no evidence presented by the daughter to establish that the mother intended to give the property to her as a gift. Instead, the Court concluded that the mother transferred the property to reduce her assets to qualify for Medicaid benefits. Due to the lack of intent, the Court concluded that the property was not a gift to the daughter and therefore the proceeds that the daughter received from the sale of the home had to be equally divided among all four children.

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