People who fear imminent death may be unable to update their will before death takes them. For this reason, they may decide to make an immediate gift of some item of personal property to a person they would otherwise make a beneficiary of the will. The classic scenario is a gift made while on a deathbed.
“Gifts causa mortis” is a Latin phrase that refers to gifts made while contemplating death. Gifts causa mortis are usually made because the donor is dying; however, the donor does not need to be dying to qualify as a gift causa mortis. The term also applies to gifts made when the donor knows they are about to enter a risky situation with a high risk of death.
Gifts causa mortis differ from gifts made “Inter vivos.” “Inter vivos” describes the typical gift made between individuals who do not expect the donor (the giver) to die soon. Inter vivos gifts generally become irrevocable as soon as the donee accepts the gift. After that point, the donor has no legal right to the property and cannot reverse the gift.
In contrast, gifts made in contemplation of death are treated differently after the gift is made. Special rules apply, including:
- The donor can demand that the gift be returned. This is because the law recognizes that a person may want to make a particular gift if they are not going to be around to enjoy the item themself, but at the same time, they may maintain the desire to enjoy the property if they can do so;
- The gift only becomes irrevocable once the donor dies;
- Gifts made in contemplation of death are taxed as if they were in the estate, not as a gift;
- These gifts cannot include real estate, only personal property.
So what are the formal requirements for a gift causa mortis, and how does it differ from other types of gifts in estate and property law? Here is a short guide to gifts causa mortis.
How Do I Make a Gift Causa Mortis?
Certain requirements need to be met to qualify as a gift causa mortis. Not every jurisdiction allows for this gift, and every jurisdiction that allows these gifts may use slightly different language in their written laws. Nevertheless, a few basic elements are common. These are:
- Intent: The first requirement is that the person must intend to make the gift or transfer to the person they want to receive ownership. If someone is forced or coerced by threat of violence, blackmail, or some other action, the intent element requirement is not met
- Delivery: The next requirement is to deliver the gift to the donee (the recipient). If physical delivery is not possible or is impractical at the time, symbolic delivery (such as through a document) is acceptable. At that point, the owner relinquishes ownership of the property
- Acceptance: The person receiving the gift must accept the gift
- In Anticipation of Death: Last, the giver must make the gift causa mortis in anticipation of imminent death (whether because of illness or because the giver is about to take some highly risky action)
What Are Some Examples of a Gift Causa Mortis?
One of the best ways to help illustrate how gifts causa mortis work is through an example. Suppose that Adam is about to have a serious surgery where the likelihood of his survival is around 50/50. The night before the procedure, he calls his best friend Bob over and tells him that he will give him his baseball card collection. Adam then hands the book of cards to Bob, who takes them home. This is a good example of a completed and valid gift causa mortis. If Adam survives the surgery, he has the right to demand that Bob return the collection of baseball cards to him.
Another example would be when Marie is in the hospital with a serious illness and is not expected to recover. She tells her grandchild Jennifer that she is giving her Marie’s automobile. So long as the grandchild did nothing that could be construed as coercing the donor, this is a valid gift causa mortis.
Can Gifts Causa Mortis be Revoked?
One major difference between an inter vivos gift and one made causa mortis is whether or not the giver can revoke the gift. The laws controlling causa mortis gifts state that the gift is revocable (can be taken back) at any point while the giver is still alive, completely at the donor’s discretion. The actual right to keep the gift is only complete when the person giving the gift passes away.
With an inter vivos gift, there’s no turning back once the transfer is made. The gift then becomes irrevocable, and the recipient has full legal ownership of the property.
The second aspect of revocability with causa mortis gifts is that there are situations where a gift can be automatically revoked. If the situation that caused the giver to expect death around the corner passes, then the need for the gift causa mortis is eliminated and automatically revoked.
What Are Some Conditionality and Tax Implications with Gifts?
Another important thing to note is that the person on the receiving end of the gift causa mortis must survive the giver to obtain ownership of the property legally. This means the potential donee has a legal interest in the gift once the donor dies, but the donee’s estate and heirs have no legal interest. With inter vivos gifts, since the legal ownership has already been transferred, it will then be distributed to their heirs according to their will or through probate law.
Regarding tax implications, under federal tax law, gifts causa mortis are treated as if they were bequeathed via a will. They are not treated as gifts, which are subject to tax if they are for property or money worth more than $15,000 ($30,000 for a married couple). This exemption is because the gift is not technically complete until the giver dies. Estates are also taxed, but a person can give away almost $13 million through their will before an estate tax is charged, so transferring the property via will instead of as a lifetime gift is financially quite important.
Do I Need an Attorney to Make a Gift Causa Mortis?
The key to properly distributing personal gifts is thorough, detailed planning. While no one can anticipate every possible situation in the future, it is better to handle gifts with in-depth planning rather than carelessly distribute them.
If you have questions or legal issues about distributing personal gifts near the time of your anticipated death, you may wish to consult with a will attorney for advice. An attorney near you can help advise you on distributing your gifts according to your desires. Alternatively, if you receive a personal gift causa mortis, a lawyer can help defend your interests if a contest or dispute arises.
Estate planning can be both emotional and complicated. So, if you are looking to make a gift like this, seeking out the help of an estate planning attorney is the best way to ensure all your wishes are properly and legally documented.