Gifts in Contemplation of Death

What are the legal implications of gifts given because of an impending death?

Coley v. Walker, 680 So.2d 352 (Ala. App. 1996)

A pastor visits an elderly church member in her hospital room prior to major surgery. The member delivers several items of jewelry to the pastor and informs him that “I want the church to have these items if I don’t survive.” The woman does not survive the surgery. Does the church own the jewelry? What if her heirs claim ownership of the jewelry? How would a court rule? The answer to these questions depends on the legal principle of gift causa mortis. A recent case illustrates the application of this principle.

Facts of the case. A woman was taken to a hospital emergency room after suffering a massive heart attack. She was informed that she needed immediate open heart surgery. As she was being taken to the surgery room, with her pastor and niece by her side, she was told that she would have to remove her rings. She removed the rings and, in the presence of her pastor, handed them to her niece. She stated that she wanted her niece to have the rings if she died during surgery. The woman died during open heart surgery, and a dispute arose as to the legal ownership of the rings (which were valued at $5,000).

The court’s ruling. A court ruled that the niece owned the rings. It based its decision on the legal principle of gift causa mortis, which it defined as follows:

A gift causa mortis is a gift of personal property made in the immediate apprehension of death, subject to the conditions … that if the donor should not die, as expected, or if … the donor should revoke the gift before death, the gift should be void …. It is essential to the validity of the gift causa mortis that the property be delivered to the donee ….

The court concluded that this definition was met, and so a valid gift of the rings to the niece had occurred. It noted that the donor knew that she was about to undergo open heart surgery and that there was a serious risk of death.

Relevance to church treasurers. It is common for pastors to be present with church members who are about to undergo surgery or who are suffering from a terminal condition. Sometimes such persons will hand the pastor an item of jewelry or something else of value, with instructions as to its disposition in the event of their death. In some cases donors designate the church as the recipient, while in others an individual is named. It is only after the person dies that the pastor confronts the legal consequences of the transaction. Who owns the property? Were the donor’s “deathbed” instructions legally binding? This case will help pastors, church treasurers, and other church leaders understand the legal principles that apply in answering these important questions.

Key point. In some cases the donor’s heirs will challenge a gift causa mortis, particularly if a pastor claims that the donor wanted the property to be distributed to his or her church. Heirs may view the pastor’s testimony as self-serving and possibly false. It is very important in such cases for the pastor to have at least one witness who can testify regarding the donor’s wishes. So, if a person facing major surgery delivers property to a pastor with instructions as to its disposition in the event of his or her death, the pastor should immediately find someone who can witness the transaction and hear the donor’s instructions. This will make it much easier to uphold the legal validity of the transaction if it is later challenged.

This article originally appeared in Church Treasurer Alert, August 1997.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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