Death bed gifts

Two recent decisions concerning death bed gifts, or donatio mortis causa (DMC), have shone a useful light on this somewhat obscure and little understood area of the law. In 2013 the High Court heard the case of Vallee v Birchwood [2013] EWHC 1449 (Ch) and earlier this year, it handed down judgment in King v Dubrey and others [2014] EWHC 2083 (Ch. Both are important decisions which follow the leading judgment of the Court of Appeal in Sen v Headley [1991] EWCA Civ 13.

The Cases

In Vallee v Birchwood, Cheryle Vallee, who was the natural daughter of the deceased but had been adopted out, had kept in touch with the deceased and regularly visited him. When she visited him in 2003, she alleged that he said that he expected not to live much longer and wanted her to have his property. He gave her title deeds to the property and the keys. The deceased died just before Christmas 2003, intestate. Mr Birchwood was a genealogist who tracked down relatives of the deceased (in Ukraine) and who obtained a grant as attorney for one of the relatives. He rejected the claim Cheryl advanced that she was entitled to the property as a result of a valid DMC.

In King v Dubrey, the deceased's nephew (who lived with her to provide care) alleged that the deceased made a gift of her property just before she died, handing the title deeds of the property
to the nephew with words to the effect:
"This will be yours when I go." Historically, the deceased had made a will in 1998 gifting the residue of her estate (which included the house) to animal charities but she had subsequently made a number of invalidly executed wills gifting the house to her nephew.

The Legal Position

In both cases the court found for the claimant beneficiary and each turned on their own particular facts, but the following key points, which emerge from the cases, are of relevance when considering the validity of any DMC claim against an estate:

1. The deceased’s motive 

The deceased must have made the gift in contemplation of their death. The deceased’s belief is subjective, even if wrong, but the beneficiary of the gift has to prove the deceased’s belief as to their impending death at the time the gift was made. So long as the deceased’s motive for making the gift had been a subjective belief in his or her death in the near future, it is a valid gift – in Vallee v Birchwood the deceased died some four months after the gift. 

2. Conditionality 

The gift is made conditional on the deceased’s death – if they recover and do not die, the gift is no longer valid.

3. Transmission of gift

The deceased must transfer the asset or in some way part with the indicia of title to the subject matter of the gift. This may be the keys to a car for example, or as in the cases of Vallee and King, the handing over of the title deeds to the property to the intended beneficiary. Continued occupation of the property by the deceased does not invalidate the gift. It is not clear whether the handing over of title deeds, so as to amount to a valid gift, in this context can only be in respect of unregistered land (where loss of control of the deeds would bar any further dealing with the land by the deceased) or whether it extends to registered land as well. 

4. Gift must be effective 

The property in question must be capable of being given away by way of a transfer or parting with the indicia of title. This is not such an issue with a car for example or with other chattels, but with regards to land, the gift takes effect by way of a gift of the beneficial interest, and a constructive trust arises so the personal representatives of the deceased’s estate hold the property on trust for the intended beneficiary.

While it may be a rare thing to come across a DMC in practice, these recent decisions reinforce the fact that such gifts do exist, and they provide welcome clarity as to the requirements for establishing their validity.

Lloyd Junor is a senior associate at Thomas Eggar

He writes the regular in-practice article on wealth structuring for Private Client Adviser

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