A serious illness. The progression of a disease. Entering end-of-life care. Any of these scenarios may cause an individual to think about passing on their property or giving gifts to loved ones while they are still alive – even if an estate plan has already been created.
Whether a person’s death was long-anticipated, or their impending death came on suddenly, there are many reasons an individual might give someone a gift before they pass away.
What happens when someone gives a gift before impending death?
Gift causa mortis
When someone gives a gift because they are dying, it is known as a “gift causa mortis,” or “a gift because of death.” This type of gift only applies to personal property, so a loved one cannot give away the family home.
Like other gifts, the three requirements for a gift causa mortis are as follows:
- Intent. The individual must intend to give the gift to the recipient.
- Delivery. The individual must deliver the gift to the recipient before death. In some cases, a symbol, such as a key to open a large gift, is sufficient.
- Acceptance. The recipient must accept the gift. In many cases, acceptance can be implied if the gift is something a reasonable person would want.
The factors that make it a gift causa mortis are that the person giving the gift, the donor, is both contemplating the gift as they are dying, and then they actually die. Unlike other gifts made during a person’s lifetime, a gift causa mortis is typically revoked if the donor recovers.
While the gift may still be valid if the donor makes a recovery, it would no longer fall into this category of “death bed” gifts. If your loved one recovers after making a gift while they thought they were going to die, they can revoke the gift.
What about the rest of the estate?
Typically, a gift causa mortis supersedes what is in the other documents in the estate plan as if the donor gave it away at any other time during their life. The important difference, however, is that in most cases, a gift given in anticipation of death may still be included in the value of the estate for federal tax purposes.
If your loved one gave a gift as one of their final acts, it is important to keep gift causa mortis laws in mind. The gift could impact the probate process.