A Strong Offense
A Stronger Defense
Disputes over gifts causa mortis are rare. That’s probably because, if a donor is going to make a gift causa mortis, he or she might just as well dispose of the asset through a will.
Here’s a quick refresher on gifts causa mortis: A gift causa mortis is a gift made in contemplation of death. Under this doctrine, a gift made during the life of the donor becomes effective upon the donor’s death if certain requirements are met. While gifts causa mortis and inter vivos gifts are similar, an inter vivos gift, unlike a gift causa mortis, passes immediately with irrevocable title upon the gift being completed.
Roger Hansen died intestate. Prior to his death, he had been meeting with an attorney to make a will, but died shortly before the appointment at his attorney’s office at which he was to execute his will. Hansen was survived by a brother, Lyle, a sister, their children, and the children of siblings who had predeceased him.
During his lifetime, Hansen made mortgage loans to Lyle’s three daughters and was the vendor on a land contract with a grandson of Lyle. Lyle, as Hansen’s personal representative, included the four notes in Hansen’s probate estate.
The debtors and their spouses moved to strike the notes from the estate inventory on the grounds that Hansen had forgiven the notes prior to his death and that the pardons amounted to gifts causa mortis. The basis for striking the notes were a notation Hansen made on an early draft of his will, directions in a letter from Hansen to his attorney about revisions to his will, and Hansen’s approval of the resulting revisions by the attorney.
Under Wisconsin law, there are four requirements for a valid gift causa mortis: (1) the donor has an intention to make a gift effective at death; (2) the donor makes the gift “with a view to the donor’s death from present illness or from an external and apprehended peril”; (3) the donor must actually die of that ailment or peril; and (4) there must be a delivery.
The Wisconsin Court of Appeals didn’t have to get into all the questions surrounding Hansen’s cause of death because it determined that there was not a delivery. While Hansen gave his attorney some writings instructing the attorney to change the will to accomplish the debt forgiveness, the purpose of those writings was not to give the debtors a document forgiving the debt. For there to have been a valid gift causa mortis, delivery of some document forgiving the debt would have had to been made to the debtors rather than to a third party (the lawyer). Because there was not a complete delivery, there was not a valid gift causa mortis.
The sad part of this tale is that there was no dispute that Hansen intended that, upon his death, the debts owed him by Lyle’s daughters and grandson would be forgiven. Hansen, however, died before his will embodying this desire was validly executed.