There may be many reasons why a person wants to give away their assets when they know or believe they will soon die. They may never have gotten around to making a Will or won’t get the opportunity to update their current Will. They may want to provide a benefit to someone who has recently helped them. Or, they may want to disinherit someone who has done them wrong.
At common law, a gift in contemplation of death is known as a donatio mortis causa and there are rules to determine if and when such a gift is validly made.
Gifts made shortly before death often come under scrutiny after the donor’s death when the exact nature of the estate is being determined. Those beneficiaries interested in the estate may feel that they have been wronged by the gift. This puts the executor of the estate at risk of claims and they may feel the need to seek directions from the Supreme Court to determine whether any gifts before death were validly made.
The three essential elements of a donatio mortis causa were set out in the case of Public Trustee v Bussell (1993) 30 NSWLR 111 per Cohen J:
- the gift must be made in contemplation of the donor’s death, although not necessarily in expectation of death;
- there must be delivery of the subject matter of the gift to the donee or a transfer of the means or part of the means of getting at the property, or, as has been said, the essential indicia of title; and
- the gift must be conditional upon it taking effect on the death of the donor, being revocable until that event occurs: …
Satisfaction of the first and third elements can usually be satisfied by the words and actions of the deceased. The second element will depend on the nature of the gift. In the recent case of Hobbes v NSW Trustee & Guardian  NSWSC 570 it was found that gift of the deceased’s fixed term investment bank account to his friend Ms Hobbes was valid because, while very unwell and waiting for an ambulance to arrive, he handed her the passbook and card for the account, saying “Take these. I don’t need anymore. Plenty there for you. Look after you”
Also in the case of Hobbes, it was found that a gift of real property could not be made so simply as by handing over the keys to the property. Indeed, in Australia the doctrine of donatio mortis causa currently does not apply to land. Even handing over the duplicate Certificate of Title would not have been sufficient to make a valid gift.
The above cases highlight the need for concrete evidence to support the validity of a gift. If the donor and donee and the only individuals present when a gift is given, then what really happened comes down to one person’s evidence and any inferences that can be drawn from surrounding events.
To avoid your gifts becoming the subject of legal challenge, see the tips in my article on “Gifts in Estate Planning“.