Key Takeaways
- Conditional gift given in anticipation of imminent death.
- Revocable if donor survives the specific peril.
- Only personal property, not real estate, qualifies.
- Bypasses probate if donor dies from the peril.
What is Gift Causa Mortis?
A gift causa mortis is a conditional transfer of personal property made by a donor anticipating imminent death from a specific peril, which becomes irrevocable only if the donor dies from that peril. Also known as a gift in contemplation of death, it differs from an inter vivos gift by its dependency on the donor’s death.
This type of gift bypasses probate, making it a unique estate planning tool when compared to testamentary gifts governed by formal wills.
Key Characteristics
Understanding the core features of a gift causa mortis is essential for its valid execution:
- Conditional Transfer: The gift is effective only if the donor dies from the anticipated peril, otherwise it is revocable.
- Personal Property Only: Typically limited to personal items; many jurisdictions exclude real estate from being gifted this way.
- Delivery and Acceptance: The donor must deliver the property or its symbolical equivalent, and the donee must accept it.
- Intent: Donor’s clear intent to gift in contemplation of death must be evident to avoid disputes.
- Non-Probate Transfer: Becomes part of the estate but avoids probate, differing from a will.
How It Works
A gift causa mortis operates under strict conditions tied to the donor’s health and intent. The donor must be facing a known peril, like a terminal illness, and intend the gift to take effect only upon death from that peril.
If the donor recovers or revokes the gift before death, the transfer is nullified. However, if the donor passes away due to the specific cause, the gift becomes absolute without the need for probate, similar to a backdoor Roth IRA bypassing typical formalities.
Examples and Use Cases
Gift causa mortis is often used in situations requiring swift transfer of assets without probate delays:
- Family Heirlooms: A person terminally ill might give a valuable antique to a relative with a signed note, ensuring the gift takes effect only if they succumb to their illness.
- Vehicle Titles: Donors facing risky surgery could transfer car ownership to a trusted family member, which becomes permanent if they die from surgical complications.
- Stock Transfers: Investors holding shares in companies like Delta or Apple might use gift causa mortis to pass holdings quickly to heirs without probate delays.
- Estate Planning: Some use it alongside strategies involving low-cost index funds to streamline asset transfer while managing estate taxes.
Important Considerations
Before relying on a gift causa mortis, be aware of its limitations and risks. Jurisdictional differences, such as California’s restriction to personal property, affect validity. Also, documentation and witness support are crucial to prove donor intent and delivery, reducing potential litigation.
From a tax perspective, the gift is included in the donor’s estate for federal estate tax calculations, unlike many inter vivos gifts, so understanding ability to pay taxation is critical for effective planning.
Final Words
A gift causa mortis offers a way to transfer personal property outside of probate if the donor dies from a specific peril, but it remains revocable until that condition is met. Review your situation with an estate planning professional to determine if this conditional gift aligns with your goals and state laws.
Frequently Asked Questions
Gift Causa Mortis is a conditional gift of personal property made by someone who expects to die soon from a specific peril or illness. The gift only becomes permanent if the donor actually dies from that peril; otherwise, it can be revoked.
To be valid, the donor must intend the gift due to imminent death from a known peril, deliver the property or a symbolic equivalent to the recipient, and the donee must accept it. Additionally, it must involve personal property, not real estate.
Yes, the gift is revocable if the donor recovers from the peril, changes their mind, if the donee dies first, or if the donor explicitly revokes it in their will. It only becomes irrevocable if the donor dies from the specified peril.
Unlike a regular lifetime gift, which is unconditional and irrevocable once delivered, a Gift Causa Mortis is conditional on the donor's death from a specific peril and can be revoked if the donor survives.
Yes, if the donor dies from the specified peril, the Gift Causa Mortis transfers the property outside of probate, making it a non-testamentary transfer.
Generally, no. In many jurisdictions, including California, Gift Causa Mortis applies only to personal property and does not cover real estate transfers.
If the donor survives the peril for which the gift was made, the Gift Causa Mortis automatically revokes and the property remains with the donor.
Originating from Roman law and adopted in English common law, Gift Causa Mortis was created to allow property transfer upon imminent death without formal wills, although it carries some risk of fraud.
