Gifts in Contemplation of Death
Gifts in Contemplation of Death
Gifts in contemplation of death, a gift made in contemplation though not necessarily in immediate expectation of death in circumstances which show that it is to take effect only in the event of death are valid revocable gifts. They may be revocable in the event that the donor does not die or recover.
Formerly, gifts in contemplation of suicide where held to be against public policy. It appears that if the donee or did not contemplate suicide at the time of the gift, the principle does not apply.
The title does not transfer until the donor has died. A gift in contemplation of death is treated as a gift on death for the purposes of capital gains tax and capital acquisitions tax.
Requirements
The gift must be made in contemplation of death. Death must be imminent or anticipated in the near future. This may result from ill health or from an intent to undertake a risk or hazardous activity or operation. The gift is given is made on the basis that it conditional on death.
A transfer of control is necessary. If legal ownership is transferred, full possession and delivery are given, the doctrine does not (need to) apply.
If it is not fully protected, he may have equitable title and is entitled to require the personal representatives to transfer.
The degree of control need not be the same as required for a legal transfer of ownership. Joint control such as of a key has been held to be a sufficient transfer even if it is not exclusive.
A gift of this nature may take place in relation to intangible property such as share certificates or a bank account. Some indication of transfer of control will suffice. For example, share certificates, post office books, deposit books et cetera.may be placed in the other’s possession and control.
Modes of Transfer
In the case of movables and some intangible represented by movables, delivery is necessary. It need not happen at the moment of death. Prior delivery even if for another purpose suffices. It must be indented that complete control over the thing concerned be given to the donee.
In the case of a chose in action, delivery of a crucial title document may suffice if the document is a crucial indication or evidence of possession or title, it will suffice.
Transfer of banknotes, bank deposit books, bills of exchange payable to the donor, share certificates, policies of assurance, savings books have been held to be sufficient indication of possession and ownership such that their delivery may constitute a valid gift in contemplation of death.
Following have been held not to suffice: checks drawn by the donor and not presented in his lifetime, IOU, certain bank books. Where a donor resumes possession, the gift is ended. This does not apply where the donor with the consent of the donee takes charge of the subject matter of the gift.
There must be a delivery to the donee or his representative of the thing concerned on the transfer of the means of getting it. The delivery may be by a third party who is so directed to deliver it by the donor. It must be that the delivery is by way of a gift and not merely for caretaking or other purposes. The expression of the trust or condition must be part of the gift and must be contemporaneous with it.