Private Lives – Donatio mortis causa: a deathbed gift

The best way to ensure your estate passes as you wish on your death is to make a valid Will.

As with everything, however, there is an exception. A donatio mortis causa or deathbed gift is a gift by a person (the donor) in contemplation of their impending death and made independently of any Will they may have in place. When the donor dies, the subject matter of the gift passes to the person the deceased intended to benefit (the donee).

Might the doctrine of donatio mortis causa therefore be an alternative option for someone looking to make provision at the end of their life? Alternatively, you may be acting as a personal representative of an estate and someone is asserting that the deceased intended them to inherit a particular asset which was not included in the Will.

The following four requirements must be satisfied for a valid donatio mortis causa (or DMC):

• the gift must be made by the donor in contemplation of the donor’s impending death
• the gift must be contingent on the donor dying
• the donor must part with possession of the subject matter of the gift or deliver it in some
• way to the donee before their death; and
• the subject matter of the gift must be capable of being given away in this manner.

1.Contemplation of death

This requires something more than a recognition of the universal truth that all of us will, ultimately, shuffle off this mortal coil. The donor needs therefore to anticipate death, in the near future, from a known cause.

It will not however affect the validity of a DMC if the donor makes the gift in contemplation of death from a particular cause, but in fact dies from a different cause. In Wilkes v Allington [1931] the Courts ruled there was a valid DMC where an individual passed away from pneumonia having made some gifts to take effect on his death which he expected to be from cancer.

2.Contingent on death

For a valid DMC, the donor must have intended the gift to take effect only on his or her death. If the donor recovers, the property reverts to the donor.

If the donor wants the donee to benefit from the gift immediately, he or she should consider taking advice on making an effective inter vivos (or lifetime) gift instead.

The donor may revoke a DMC at any time up to death by reclaiming possession or control of the relevant property or otherwise putting the donee on notice that the DMC is revoked. It is not possible to revoke a DMC by contrary intention in a subsequent Will.

3.Parting with possession and delivery

This requires both intention and an act on the donor’s part. The donor must grant the donee control over the subject matter of the gift and the question as to whether this requirement has been satisfied depends on the nature of the asset:

• for chattels (such as jewellery, antiques or art) physical delivery is sufficient. The Courts have also upheld a DMC of a car where the donor had handed the donee the keys
• unregistered land can be the subject of a DMC where the donee is given the deeds to the property. In the Court of Appeal case of Sen v Headley [1991] the donor told the donee that his house and its contents were hers. The donor went on to state that the deeds to the house were kept in a steel box. After the donor had died, the donee discovered that he had slipped the key for the box into her handbag. There was a valid DMC
• handing the donee the relevant pass books or certificates is likely to amount to sufficient delivery of cash in deposit accounts in the donor’s sole name or savings with NS&I or the Post Office.

4. Subject matter of a DMC

Finally, the asset in question must be capable of being given away in this manner.

One example of an asset which cannot constitute the subject matter of a DMC is a cheque raised by the donor, as the cheque will terminate on the donor’s death. It is possible however for a cheque made payable to the donor to be transferred in this way.

There has been some debate as to whether shares can form the subject matter of a DMC, but case law suggests that shares in a public company can be so conveyed, provided an executed share transfer form is delivered to the donee.

Effect of a valid DMC

Providing it is not revoked during lifetime, upon death the DMC will become complete and valid. The value of the gift will still form part of the deceased’s estate for inheritance tax purposes.

In conclusion, although it may be possible to make a DMC, it is a risky strategy and should 
only be considered as a last resort.

It may be that we see an increase in people seeking to rely on this old doctrine as a result of the current pandemic, but courts are likely to adopt a cautious approach due to the clear risk of fraud and abuse.

If you are considering how your assets should pass on your death, please contact us and we can discuss the options available to you, including making a Will.

If you are a personal representative dealing with an estate in which the question has arisen, you should seek advice to determine whether the above requirements for a valid DMC have been satisfied.

This article is from the spring 2020 issue of Private Lives, our newsletter covering the key legal and tax issues that individuals face. To download the latest issue, please visit the newsletter section of our website. 

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