Gifts dependant on death

Online Will Writing Blog Article
Table of Contents
    Add a header to begin generating the table of contents

    Donatio Mortis Causa

    In this month’s article we are going to look at gifts made in contemplation of death and what will be held as valid, even if they are not expressed in a will and examine how these work.

    Although this may not impact on a will writer’s daily life, it could be important to your clients who make gifts of property near their death to family members or friends and want to ensure these gifts will be considered as legally binding in the eyes of the law.

    This paper establishes what specific types of property can be gifted by the donor and what elements are required so it can constitute a legal gift.

    A ‘Donatio Mortis Causa’[i] is a gift made in the donor’s lifetime, but only comes into place on death of the donor providing certain conditions are met, it is also worth remembering a ‘donatio mortis causa’ is a singular gift derived in part from civil law[ii]. It is neither a gift inter vivos[iii] nor a gift by a will, this was explained in Buckley J in Re Beaumont [1902][iv],

    ‘A donatio mortis causa is a singular form of gift. It may be said an amphibious nature, being a gift which is neither entirely inter vivos nor testamentary. It is an act inter vivos by which the donee is to have the absolute title to the subject of the gift not at once, but if the donor dies’

    Therefore a donatio mortis causa has its own distinct requirements which are as follows:

    1)      It must be intended by the donor to be conditional on his own death;
    2)      It must be made by the donor in contemplation of death;
    3)      Before the death of the donor they must part with dominion over the subject matter of the donatio, and
    4)      Finally, the subject matter must be capable of passing by donatio mortis causa.

    The important part of a donatio mortis causa gift is it will only become absolute on the donors death, up and until that point the gift is revocable. There must be clear intention to make the gifts, but only if the donor dies and if the donor survives this gift will fail as the donor death did not occur.

    In regards to the intention of the donor they need not express their intention in words, it may be inferred from circumstances in which the gift had been made. In the case of Gardner v Parker[v] we saw a donor give to the receiver a bond for the sum of one thousand eight hundred pounds, the donor stated ‘there, take that and keep it’, the donor died two days later. The judge in this case held it was a valid donatio mortis causa, inferring from the circumstance that the donor intended the gift to be conditional on the donor’s death.

    Even if the donor knows they are certainly going to die within a short time, there seems no reason why they should not show the necessary intention that the gift should become absolute only at the donors death.

    Remember there can be no donatio mortis causa if the donor intends to make an immediate gift inter vivos. In that case the gift stands or falls as an ordinary gift inter vivos: if it is invalid as a gift inter vivos, it may become effective after the donors death under the rule in Strong v Bird will apply, however we will not be examining this case in this article.

    There will be no donatio mortis causa if the donor intends to use a will as a way of making these types of gifts as a will only come into place on death, whereas a true donatio mortis causa will only come into place if the donor gives this gift up in their lifetime, which involves a physical or mental intention of the donor to make the gift.

    If the donor does not form the necessary intention in stating or implying the gift should only become absolute at their own death without contemplating death. But it is not sufficient for the donor to complete the possibility of death at some vague time in the future. This second requirement is only satisfied if the donor contemplates death “within the near future, what may be called death for some reasons believed to be impending”.

    The donor need not contemplate immediate death or is considered to be on their death bed when they make the donatio mortis causa. In Wilkes v Allington[vi] this requirement was satisfied because, at the time of the donatio, the donor knew that he had cancer and believed himself to be a doomed man: he did not know precisely how long he had to live, but understood he was likely to die soon. A month later he caught a chill on a bus on his way home from market and died of pneumonia. The court held that the donatio mortis causa was valid because it was not conditional on his death from a particular cause contemplated by him.

    Would it suffice if the donor mistakenly believed that he was suffering from a serious illness and was a doomed man? Probably it would, because the second requirement appears to be a concern with the donor’s subjective assessment of his situation. Again, it would probably suffice if the donor contemplated death from some dangerous mission which he was about to undertake. Contemplation of death by suicide may also suffice as suicide is no longer a crime.

    Before the donors death they must part with dominion over the subject matter of the donatio. Two elements are required – (a) the donor’s intention to part with dominion: and (b) a sufficient delivery or transfer of the subject matter of the gift, or of something representing it to the donee.

    The donor must intend to part with dominion over the assets to the donee. In Reddel v Dobree[vii] the following occurred, X when in declining health, delivered a locked cash box  to Y, telling her that the box contained money for her and that he wanted the box from her every three months whilst he lived, and that at his death Y was to go to his son for the key. The court held, that there was not a donatio mortis causa. X intended to retain dominion over the contents of the box during his lifetime: he had kept control of the key and had reserved to himself in advance the right to deal with the contents.

    Remember there will be no donation mortis causa if X merely intends Y to have custody of a locked box and not give the key to X’s. In this case they purely hold the custody of box and nothing else. The donor may, however, have the requisite intention to part with dominion even though he imposes on the donee a trust; for example a trust to make certain payments to another person, or to pay the donor’s funeral expenses.

    There must also be a sufficient delivery in the donor’s lifetime. If the donor does not part with dominion in his lifetime, the donatio mortis causa fails. In Burns v Markham[viii], X believing himself to be near death, directed that the words, “for Mrs and Miss C” should be written on sealed parcels containing money and securities, and declared that the parcels were to be delivered to Mrs And Miss C after the donor’s death.

    X then directed that the parcels should be put back into his iron chest of which he kept the keys. After X’s death it was held there was no donatio mortis causa as there was no act of delivery and the donor had not parted with dominion in his lifetime.

    Delivery in the donor’s lifetime is essential, but it does not matter whether the delivery is made before, or after, the donor expresses his intention to make the donatio. For example in Cain and Moon[ix] a daughter delivered a deposit note to her mother for safe custody. Two years later when the daughter was seriously ill she told her mother, “the bank-note is for you if I die”, in these instances the court was satisfied that this was a donatio mortis causa: the antecedent delivery sufficed, and it was not necessary for the mother to hand back the deposit note and for the daughter to re-deliver it when she expressed her intention to make the donatio mortis causa.

    The concept of delivery need not be by the donor alone and it can be acted on behalf of donor by another (i.e. an agent), however delivery to the agent does not suffice alone to be a donatio mortis causa.

    Remember with a chattel there must be a delivery of the chattel (e.g. the donor hands his watch to the donee) or delivery of the means of obtaining the chattel (e.g. the donor hands to the donee the key of the box which contains the watch), the latter suffices because the delivery is fore-filled as the donor parts with the chattel. A mere symbolic delivery, such as the delivery of a watchstrap as a symbol for the watch does not suffice.

    If the watch had been in a box and the donor hands the key to the box to the donee this will be seen as sufficient even if the donor had not given the donee the box in the first instances. In the case of Woodard v Woodard[x] the Court of Appeal upheld a decision that there had been a valid donatio where one set of car keys had been handed over and the other set of keys or the spare set had been retained by the donor. This was not considered to be the donor retaining the benefit of the property. However this case was considered to be close to the borderline.

    In Re Lillingston[xi] the following events happened, L in contemplation of death, handed to P a packet of jewellery and the keys to her trunk, telling her that the trunk contained the key to her Harrods safety deposit box, which in turn contained the key to her city safe deposit. L said she wished P to have all of her jewellery and after her death and P could go and get the jewellery in these safe deposits boxes.

    L and P agreed that the packet of jewellery should be kept in the trunk, which was in L’s room, and placed the packet in the trunk. L then stated “keep the key: it is now yours”. The court in this case concluded there had been a valid donatio mortis causa of the packet of jewellery as the key had been given to the donee and the key opened the boxes which contain this gift, the courts held as long as the key opened the box the scope of the gift is clear, i.e. the gift was the jewellery inside.

    It was also concluded that under the terms of the agreements between L and Harrods, P also needed L’s signed authority to withdraw the jewellery from Harrods safe deposit, in the above instances L had transferred partial dominion to P and this sufficed.

    In the case of Birch v Treasury Solicitor[xii], B in contemplation of death handed to H and W her Post Office Saving Book, London Trustee Saving Bank Book, Barclays Bank deposit pass book and a Westminster Bank account deposit, intending that the money in these bank accounts should be given to H in the event of her death. The Court of Appeal held that this was sufficient delivery to establish a donatio mortis causa and was held to each of these bank accounts.

    The test to apply is the following:

    “Whether the instrument ‘amounts to a transfer’ as being the essential indicia are evidence of title, possession or production of which entitles the processor to the money or property purported to be given”

    The test was satisfied, because in the case of each bank account the production of each bank book was needed to be able to withdraw from the accounts and the handing over bank books was seen as the act of delivery.

    In most cases most if not all of pure personality is capable of being the subject matter of a donatio mortis causa. Thus bonds, insurance policy, a bankers deposit note and saving certificates have all been held to be capable of passing as a donatio mortis causa. In the following paragraphs we will examine different subject matter which need more consideration.

    In Duffield v Elwes[xiii] it was traditionally held that a mortgage can be the subject of a donatio by delivery of a mortgage deed: the mortgage debt passes under the donatio and it carries the mortgage security with it.  Nevertheless, it seemed to take the view, obiter that land itself could not be the subject of a donatio and for more than a century and a half this view was generally held in law as correct.

    However in the case of Sen v Headley[xiv] the Court of Appeal decided that land can be the subject matter of a valid donation. In this case the claimant had visited the deceased in hospital and the donor stated the house and the contents where hers.

    The donor advised the deeds where in a steel box and gave the claimant the keys. She later found that the deceased had slipped the keys to the box into her handbag. The Court of Appeal held this was a valid donatio of land and Nourse LJ stated:

    ‘Let it be agreed the doctrine is anomalous. Anomalies do not justify anomalous exceptions. If due account is taken of the present state of the law in regard to mortgages and choses in action, it is apparent that to make a distinction in the case of would be to make such an exception. A donatio mortis causa of land is neither more nor less anomalous than any other. Every such gift is a circumvention of the Wills Act 1837[xv]”

    Therefore in the case of land, the doctrine would operate by way of constructive trust as provided for under the Law of Property Act 1925[xvi].

    This can also be seen with cheques and promissory notes drawn by a third party passed by donatio. This is so even though it is not transferable at law by delivery, having been made payable to the donor and not having been indorsed by him. But a cheque drawn by the donor upon his own bank cannot be subject of a donatio because it does not constitute property, but it is merely an order to his bank which is revoked by the donor’s death.

    This is similar to a promissory note drawn by the donor himself because it does not constitute property, but it is merely a promise to pay money. There may, however, be a valid donatio if the donee receives payment on the cheque from the bank in the donor’s lifetime (or even afterwards before the bank is apprised of the donor’s death) or if the donee negotiates the cheque for value in the donor’s lifetime.

    Also company shares can cause issues which were highlighted in the case of Ward v Turner[xvii] which held the delivery of receipt for the purchase price of South Sea annuities was not sufficient delivery of the annuities to the donee by way of a donatio. In this case it was noted a donatio mortis causa of company stock cannot be made without a transfer, or something amounting to that and the receipts were nothing, but a waste of paper.

    In the case of Staniland v Willott[xviii] the donor, in contemplation of death, made a valid legal transfer of company shares in contemplation of death and made a valid legal transfer of shares to the done. This was held could be a donatio mortis causa.

    The key to understanding donatio mortis causa is these gifts are revocable until death of the donor or if the donor recovers from illness from which he contemplated death the gift fails. The donor can revoke the gift by expressly stating this gift is not to take effect and resuming or retaining dominion.

    Assuming that no revocation has taken place on death of the donor the donatio becomes absolute; this will vest the donor’s title to the property of the donee. This occurs where the donor makes “a complete” delivery or transfer, such as would suffice in the case of a gift inter vivos. In this case the donee’s title becomes unconditional at the donor’s death and no action on the part of the donor’s personal representatives is need to prefect the donee’s title.

    But there may be a valid donatio even though the delivery or transfer does not vest the donor’s title in the donee. In the case of a chattel or a chose in action transferable for delivery, the donor may make a delivery which suffices for a donatio mortis causa but would not suffice to support an inter vivos gift.

    Again a donatio of a chose in action not transferable by delivery may be made by the delivery of a document which amounts to a transfer, even though it does not effectively transfer the donor’s title to the donee. For instance a valid donatio may be made by the delivery to the donee of a mortgage deed, even though the legal title to the mortgage debt and the mortgage security vested in the donor.

    The same principle will apply to a donatio of land, where the donor makes a donatio by an “incomplete” delivery or transfer, the donor’s personal representatives hold the legal title on a trust imposed by law for the donee. If need be, the donee is entitled to require the personal representatives to lend their names to any necessary claim, on receiving an appropriate indemnity from the donee.

    In short, if the requisites for a valid donatio by an incomplete are satisfied, equity perfects an incomplete delivery or transfer to the donee after the donor’s death. The equitable principle of not assisting a volunteer to perfect an incomplete gift does not apply to donatio mortis causa.

    Conclusion

    From this paper we have seen that a donatio mortis causa is based around the intention of the donor giving the chattel, share or land to the donee showing a clear intention that they want this gift to take effect on death.

    Also another major element which is involved in such gifts is the donor must be contemplating death and therefore clearly parts with the gift to the donee so therefore delivery of the gift becomes essential on making these gifts finalised.

    The most important factor is the donor must die for this gift to become absolute  and if in the time or the failure of the donor to die this gift will fail as the condition of the donors death has not been fulfilled and the donor can reclaim the gift.
    [i] Donatio Mortis Causa [Latin:A gift on account of death]
    [ii] Derived from Roman Law
    [iii] Inter vivos [Latin] ‘Between living people’. If a trust is created inter vivos it is created during lifetime, as distinct from upon death. Dictionary of Law, Oxford University Press, 7th Edition, 2009
    [iv] Re Beaumont [1902] 1 Ch 889
    [v] Gardner v Parker (1818) 3 Madd 184
    [vi] Wilkes v Allington [1932] 2 Ch. 104
    [vii] Reddel v Dobree (1834) 10 Sim. 244
    [viii] Burns v Markham (1816) 7 Taunt. 224
    [ix] Cain v Moon [1896] 2 Q.B. 283
    [x] Woodard v Woodard [1995] 3 All E.R 980
    [xi] Re Lillingston [1952] 2 All E.R. 184
    [xii] Birch v Treasury Solicitor [1951] Ch. 298
    [xiii] Duffield v Elwes (1827) 1 Bli., n.s. 497 542-543
    [xiv] Sen v Headley [1991] Ch 425
    [xv]Nourse LJ,  Sen v Headley [1991] Ch 425
    [xvi] http://www.legislation.gov.uk/ukpga/Geo5/15-16/20/contents
    [xvii] Ward v Turner (1752) 2 Ves.Sen. 431
    [xviii] Staniland v Willott (1850) 3 Mac. & G 664

    Share this post

    Matt Walkden Will Writer

    About Matt Walkden

    I am a Professional Will Writer and I offer a small number of other products that complement my Will Writing such as Lasting Power of Attorneys (LPA’s), Fixed Price Estate Administration, often called Probate and some Property Products such as changing a family home from Joint owners to Tenants in Common.

    Contact An Expert Today

    Pay by Card or PayPal

    Read why over 13,000 people have written a will with us...

    As well as the many hundreds of times our clients recommend us to their friends and families, please read what some of them have written to us and said…

    “They really do cover everything thoroughly and provide comprehensive supporting information with friendly and empathetic telephone support, during what could be for some people, a traumatic process. I am so pleased thatI found them whilst doing a lot of research online and I can now rest assured that my legacy is in safe hands.”
    Mrs R. Dow, Cornwall
    “I’m very impressed with the service that your company has offered and how quick and hassle free the process has been. I will definitely recommend your service to my family and friends.”
    Miss D. Blakley – Kent
    “Please be assured that I have found your service to be nothing short of exceptional and will have no hesitation in recommending yourselves to anyone considering making a Will.”
    Mr A. Sharp, Cornwall

    Worked with us recently? Leave us a review.

    Latest Blog Posts

    When it comes to your peace of mind and your family’s welfare, the right time is now. Take a few moments to start the process of creating your will today and receive the first draft in as little as 48 hours.

    Deceased Estate Online Will Services

    Deed of Variation

    Deed of Variation and the three main ways that they can be used to protect assets and reduce Inheritance Tax
    Read More
    Will Writing Guardians

    The Importance of Family Will Writing

    Many people, especially young families, postpone family will writing. Maybe it is because it may seem unpleasant, far off, or it appears as a physical ...
    Read More
    Town Houses Blog

    Your Home

    Make Sure the Right People Inherit Your Home For most of us these days our home is our biggest asset. And with mortgage interest rate ...
    Read More