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There have been some interesting recent developments in relation to the law on what are known colloquially as deathbed gifts. One hesitates to use Latin but they are also commonly known as Donationes Mortis Causae or DMCs. This article outlines the key features of DMCs and summarises key recent developments in the law resulting from the case of Vallee v Birchwood [2013] and King v Dubrey [2014], along with highlighting why charities ought to be increasingly aware of them.
A DMC occurs where a gift does not comply with the formal legal requirements regarding the transfer of property. They do, however, have their own essential requirements.
The first requirement
is that the gift must be in contemplation of death. The case of Re Craven’s Estate [1937] shows that it is necessary for death to be ‘within the near future’.
The second essential requirement
is that the gift must be made to take effect upon the death of the donor.
The third
and perhaps most difficult to satisfy requirement of a DMC, is that the donor must deliver either the subject matter of the gift or the means of coming into possession of the subject matter to the donee or their agent.
The fourth
and often most controversial requirement, is that the property must indeed be capable of being the subject of a DMC. DMCs have been held to apply to almost every object or instrument. Until the case of Sen v Hedley [1991] it was, however, assumed that land could not pass via a DMC due to the complex legal requirements to transfer an interest in property. It was held in Sen v Hedley [1991] that a DMC can take effect as an exception to these rules.
The fifth requirement
of a DMC is that the donor must have capacity to make the gift. The case of Re Beaney [1978] demonstrated that the capacity required varies depending on the circumstances of the gift. A gift of an asset representing a large proportion of an Estate requires a higher level of capacity than a more minimalistic gift, which simply requires an understanding of the transaction taking place.
A recent, and some may say controversial example, of a valid DMC can be found in the recent case of Vallee v Birchwood [2013]. In this case it was held that that a DMC made four months before the donor died was valid.
The case concerned Miss Vallee and a gift made by her father who did not leave a Will. An important point to note here is that Miss Vallee had been adopted out of the family and so did not stand to benefit at all from the Estate. Miss Vallee did not live in the country but did come to England to visit her father often. On one such trip to visit her father he stated he may not be alive by the time of her next visit and gave the key and the deeds to his house (which was unregistered land), his war medals and a photograph album to her.
The court found that the father had made the gift in contemplation of his death. It was also held that his continued enjoyment and occupation the property was not sufficient to invalidate the gift, as it was intended to take effect upon death. Also, as he had handed over the deeds and a key to the property he had delivered the means of coming into the property.
Following on from Vallee v Birchwood [2013] is the case of King v Dubrey [2014]. In this case the court upheld a Miss Fairbrother’s DMC of her house to her nephew. This was to the disappointment of seven charities who were to inherit the house under the Will. The nephew, who was living with his aunt and caring for her, claimed that when his aunt’s health deteriorated she passed him the title deeds to the property and said (as well as wrote down in two separate documents): “this will be yours when I go”.
The nephew was said to be of dubious character.
He had been made bankrupt twice and had been in prison for acting as a company director whilst disqualified. It was held in this case that the essential requirements for a DMC had been met. This was because the gift was made in contemplation of death, even though Miss Fairbrother survived for a further four months, it was conditional upon death and she had parted with the instrument of title, representing the subject matter of the gift.
DMCs have historically been quite rare as they seemingly undermine the rigidity of the requirements to execute a valid Will and they can produce significant uncertainty and the potential for complex disputes to arise. Whether the fact we have seen two recent cases means that we will see an increase in these types of claims remains to be seen.
There are significant prospects of DMCs taking on a new lease of life, particularly as they allow for flexibility and the potential to carry out the last wishes of the dying without needing to comply with the formalities of making a Will.
For more information please contact Tony Cockayne, on 01392 687601 or tony.cockayne@michelmores.com.
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