23 March 2018
In a case that may well cause alarm to charities, the High Court recently rejected an appeal from a decision in the Oxford County Court that a purported ‘death bed gift’ of a house in August 2003 was effective even though the donor carried on living in the house for another five months. The only witness to the ‘gift’ was the deceased’s daughter, who was the beneficiary of the gift.
A deathbed gift (a donatio mortis causa) is a gift which remains conditional until the donor dies. It can be revoked in the meantime. A Court of Appeal decision in 1991, Sen v Headley, laid down three conditions for a deathbed gift to be effective:
- First, the gift must be made in contemplation, although not necessarily in expectation, of impending death.
- Secondly, the gift must be made upon the condition that it is to be absolute and perfected only on the donor’s death, being revocable until that event occurs and ineffective if it does not.
- Thirdly, there must be a delivery of the subject matter of the gift, or the essential indicia of title thereto, which amounts to a parting with dominion and not physical possession over the subject matter of the gift.’
Although cases on deathbed gifts are rare, the subject causes real concern to charities in the context of legacy income because, invariably, the only witness is the person who takes the benefit of the alleged gift. This latest case, Vallee v Birchwood, involved a gift of the donor’s home, his only significant asset. Despite the five month gap between ‘gift’ and death, the Judge considered the first and second conditions had been met. In relation to the third condition, although it is impossible to hand someone a property, it is met by the handing over of deeds (or even of a key to a safety deposit box containing the deeds).
In Vallee v Birchwood the donor died intestate. It is, however, easy to see that someone disappointed that a relative has left their estate to charity may claim to be the beneficiary of a deathbed gift which depletes or even exhausts the estate (because of course it may trigger inheritance tax).