Missed Out on a Legacy by a Death Bed Gift? All Is Not Lost.

A death bed gift (sometimes referred to as ‘donatio mortis causa’) is a gift of an asset given before a person passes away. It is considered to be outside the estate, meaning that, even if a person has been promised a particular item in the Will, they will not receive it. As can be imagined this can become a source of conflict.

There may be many reasons why a person wants to give away assets when they believe they will soon die. Perhaps they have not made a Will, or do not have time to update it, or wish to reward someone who has been of assistance recently. There are rules to determine when such gifts are validly made and, if challenged, such gifts will be subject to careful scrutiny.

If you find yourself in this position Szabo & Associates Solicitors can help when things have not gone as expected.

How can death bed gifts be legal?

A death bed gift is a means by which people can make gifts which will take effect on their death outside of the provisions of their Will or intestacy rules. In order to be a valid death bed gift there are a number of conditions that must be met. These conditions have been reviewed and developed over centuries. 

In Australia, the requirements to constitute a legally valid deathbed gift were summarised in Public Trustee v Bussell (1993). This case concerned whether or not the handing over of an envelope containing share certificates was sufficient to prove that a gift of shares had been made. The judgment set out three essential elements that must be satisfied for a death bed gift to be legally valid:

1. the gift must be made in contemplation of the donor’s death though not necessarily in expectation of death;
2. there must be delivery of the asset to the donee, or a transfer of the means of getting the property; and
3. the gift must be conditional on the death of the donor but is revocable until that event occurs.

The fourth implicit requirement is that the donor has the necessary mental capacity to make the gift.

The first and third required elements can usually be satisfied by the words and actions of the deceased. The second depends on the nature of the gift.

There is, therefore, legal provision for valid deathbed gifts to be made. However, such gifts have a history of disputes surrounding them and the facts can be difficult to establish. Often the only witnesses are the person making the gift and the person claiming it as theirs.

Challenging a death bed gift  

There is a good deal of interpretation surrounding the legal requirements when a death bed gift is challenged. There have been many examples where the gift has not been deemed valid. The reasons range from the recipient’s inconsistent story, a view that the deceased did not actually believe they were going to die at the time of giving the gift, or where the deceased has had the opportunity to make a Will but refused to do so.

Some of these issues are illustrated in the following recent NSW Supreme Court case.

Case Study: Hobbes v NSW Trustee & Guardian (2014) NSWSC 570

Mr Gibson died in 2011 without having made a Will. A year before his death he had become friendly with Ms Hobbes who helped to look after him while he was suffering from throat cancer. Following his death Ms Hobbes claimed that Mr Gibson had made certain gifts to her to be effective upon his death. These gifts consisted of:

• the contents of a bank account of almost $150000. She had been given his passbook for the account;
• the contents of a fixed term deposit account of $100000. She was given a card containing the details; and
• his Dulwich Hill, Sydney, home. She was given keys and a local council rate notice.

The key issue was whether each gift was validly made in contemplation of death.

It was found that the gifts of the bank accounts were valid. This was because while unwell and awaiting an ambulance he reportedly said: ‘Take these. I don’t need them any more. Plenty there for you. Look after you.’

However, as regards the property it was found that simply handing over the keys was not sufficient. As Australian case law currently stands, the doctrine does not apply to land (in contrast, for example, to otherwise similar rules in England).

Ensuring the validity of a death bed gift

Gifts made in contemplation of death, made without having to comply with the usual legal formalities, can result in risks for the donor, recipient and even the legal representative of the donor’s estate.

Following the death of a loved one, an Executor’s duty is to administer the estate and collect all the assets held by the estate for distribution. It can happen that the deceased has made a gift or gifts before passing away. This can mean that an expectant beneficiary will lose their legacy and they may want to challenge the fact that ‘their’ legacy was given away prior to death. 

Death bed gifts may be made in difficult circumstances. With a perceived difficulty of accessing professional assistance it may mean that lockdown responses to Covid-19 will result in more death bed gifting. Notwithstanding this, the Courts are strict in their application of the conditions required. Making a Will is recommended as it is more likely to be upheld than the provisions of a death bed gift.

Contact our Wills Dispute Lawyers in Sydney, NSW

If you are concerned by a death bed gift there are laws that can protect your legacy. The specialists at Szabo & Associates Solicitors can give you clarity as to your situation. If you feel hurt or wronged by events that have not gone as expected you can speak to us confidentially. Please call us on 02 9281 5088 or fill in the online contact form.