09 Nov Does your Will do what you want? Deathbed gifts are not the answer
A recent case has again highlighted the need to think carefully about the provisions of your wills and to ensure they contain provisions to deal with what will happen in the event of your first named beneficiary passing away. In Davey v Bailey 2021, the Court was asked to decide whether a deathbed gift had been validly made. There are very strict rules about when a deathbed gift (known as a donationes mortis causa) (DMC) can be held to be valid.
The rules are lengthy and complicated but can be summarised as:
- A DMC must be made by a person in contemplation of their death. While they do not have to actually be on their deathbed, it is necessary that death should be in their contemplation in the near future for a specific reason. This is a very subjective test and it is the state of mind of the person that is relevant.
- The gift must take effect only if and when death occurs, and is revocable up to that time.
- There must be delivery of ‘dominion’ over the gift to the recipient of the gift.
Only if these three elements are strictly complied with will the Court hold that there is a valid DMC.
Mr and Mrs Bailey were a wealthy couple who had no children. They were close to Mrs Bailey’s family. There was a dispute as to how close they were to Mr Bailey’s family, but certainly Mr Bailey got on very well with his nephew Leslie, who had worked at Mr Bailey’s butcher’s shop for many years.
In 2009, the couple made simple mirror Wills leaving their entire estates to each other but no provision was made as to what was to happen to the estate when the second one of them died.
In December 2018, Mrs Bailey, who had been suffering from cancer for some time, was diagnosed as being terminally ill. In early January 2019, in the presence and with the approval of her husband, Mrs Bailey asked her sister, Mrs Davey, to record their wishes on a Macmillan Cancer Support checklist. Their instructions were that, after Mrs Bailey’s death, they wanted Leslie to have the butcher’s shop and Mrs Bailey’s family to have the equivalent value from her estate. Thereafter, on Mr Bailey’s death, their estates were to be split 50/50 between the two families. Mrs Bailey died of cancer less than three weeks later.
In early February 2019, while they sorted through Mrs Bailey’s papers together, Mr Bailey gave to Mrs Davey a metal box file which contained pre—registration deeds for the couple’s marital home and office copy entries in respect of its registration. Mr Bailey stated that his wife had wanted Mrs Davey to have the house, and so did he. Mr Bailey died of a heart attack in May 2019. Mr Bailey had not updated his Will and therefore on his death he would be treated as being intestate as his wife had died before him. Mrs Bailey’s family did not inherit under the intestacy rules as they were not related to Mr Bailey.
Mrs Davey and her brother claimed that they were the beneficiaries of three DMCs—from Mrs Bailey of a sum equivalent to the value of the butcher’s shop; from the couple jointly of 50% of their combined estate; and from Mr Bailey of the marital home.
The Court was asked to decide which, if any, of these three potential DMCs were valid. The Court accepted the first gift had been made by Mrs Bailey in contemplation of her death in the near future from cancer; and therefore, the first element of the test was met. However, it was not clear that the gift was to take effect ‘if and when’ Mrs Bailey died. In addition, Mrs Bailey was required to give ‘dominion’ over the gift to the beneficiary. This could mean delivery of the subject matter of the gift itself, or some means of accessing it, or of documents evidencing entitlement to possess it. They held the Macmillan form did not meet that test.
The second gift was to take effect only on Mr Bailey’s death, and so could be understood as a joint DMC by the couple or a DMC by Mr Bailey alone. However, it could not be shown that, prior to his wife’s death, Mr Bailey was contemplating his own impending death for a specific reason. In reality, the couple’s intention was to record wishes on the Macmillan form that Mr Bailey would in due course incorporate into a fresh Will.
As to the third gift, there was a dispute over whether Mr Bailey was contemplating his own impending death for a specific reason when he gave the metal box to Mrs Davey. The evidence from Mrs Bailey’s family was that Mr Bailey had been suffering severe chest pains, and that after his wife’s death he seemed to have given up the will to live. On the other hand, he had just bought a new car and had held meetings with his financial adviser to make future plans. The Court concluded that the first element of the test was not made out. Thus all three gifts failed. The intestacy rules took over and the estate passed to Mr Bailey’s surviving relatives.
The Court acknowledged that in this case Mrs Bailey’s family were deserving of sympathy in that they had received nothing from either estate, contrary, it seemed, to the wishes of the deceased couple. This whole problem could have been solved by both Mr & Mrs Bailey thinking about where they wanted their estate to go if they had both passed away or by Mr Bailey updating his own Will after his Wife passed away.
If you need assistance making a Will or amending your existing Will, talk to our specialist Wills and Probate team.