Definition
Gift Causa Mortis refers to a gift given by a person who expects to die soon, usually due to a serious illness. The gift is conditional and only takes effect upon the donor’s death. If the donor recovers or dies from another cause, the gift can be revoked.
Phonetic
The phonetic pronunciation for “Gift Causa Mortis” is “gɪft kɔːzə mɔrtɪs”.
Key Takeaways
- Gift Causa Mortis is a type of gift that is given in anticipation of one’s imminent death. It is established with the expectation that if the person dies, the gift will then fully pass to the recipient, but if the giver survives, he or she can choose to take the gift back.
- To constitute as a Gift Causa Mortis, there should be a clear intention from the donor (the giver) of making an immediate gift, but on a condition that it should take effect only on his or her death due to a particular illness or peril that he or she is currently suffering from.
- Gift Causa Mortis is revocable by the donor at any time before his or her death and it becomes void if the donor survives the illness or peril, or if the recipient dies before the donor. Also, if the gifted property is sold or given to someone else by the donor before the peril causes the death then also it becomes void.
Importance
The term “Gift Causa Mortis” is significant in the business/finance realm as it pertains to the transfer of property or assets. This specific type of gift is given by a person who believes they are about to die and wants to distribute their property. This provides a legal means for the imminent decedent to reduce their taxable estate, potentially benefiting their heirs. However, if the giver doesn’t die as anticipated or recovers from the illness, the gift can be revoked. Therefore, understanding “Gift Causa Mortis” is crucial for estate planning, financial planning and tax implications. It also carries implications for the recipient because such a gift can carry tax implications, depending on the laws of the jurisdiction.
Explanation
Gift Causa Mortis, deriving from Latin term meaning “gift in contemplation of death,” plays a significant role in estate planning and wealth management. The purpose of a Gift Causa Mortis is to allow an individual, anticipating imminent death, to transfer ownership of an asset to a designated recipient without the burdensome process of a will. The grantor’s intention is that the gift will not take effect until their death, helping them to achieve a level of peace of mind, knowing their assets will go to their intended beneficiaries. Moreover, the Gift Causa Mortis has useful implications in the realm of taxes.
If the grantor survives their forecasted death, the gift is often revocable and may not be subject to certain taxes that would apply to an inter vivos (‘between the living’) gift. In some jurisdictions, such gifts are excluded from the recipient’s taxable estate, potentially offering significant tax savings. However, it’s crucial to note that rules can vary widely, and professional advice should be sought, ensuring that any Gift Causa Mortis is structured and executed in line with local laws and regulations.
Examples
1. An older man, having been diagnosed with a terminal illness, decides to give his grandson a vintage car collection as a gift causa mortis. He understands that his time is limited, and he wants to ensure his beloved car collection will be in good hands after he passes away. He gives him the gifts days before his death.
2. An elderly woman, upon learning of her severe condition with limited survival chances, hands over her diamond jewelry to her granddaughter as a gift causa mortis, with the condition that the gift would be effective only if she passed away.
3. A businessman, being the sole passenger of a small plane that appears to be about to crash, quickly writes a note leaving his beach house to his close friend as a gift causa mortis. If he passed away due to the crash, the home would be transferred to his friend. However, if he survives the incident, the gift causa mortis holds no validity.
Frequently Asked Questions(FAQ)
What is Gift Causa Mortis?
Gift Causa Mortis, from Latin for gift cause of death, is a legal term referring to a type of gift made by a living person who anticipates their imminent death. It is a gift made in contemplation of death, and ownership is transferred after the person dies.
How does Gift Causa Mortis differ from a standard gift?
Unlike a standard gift, a Gift Causa Mortis doesn’t become fully effective until the donor’s death. If the donor survives, they can revoke the gift.
Can a Gift Causa Mortis be revoked by the donor?
Yes, the gift can be revoked by the donor at any time prior to their death. This typically would occur if the donor’s circumstances change or their relationship with the recipient alters, or if they no longer face the risk of imminent death.
What are the legal requirements for a Gift Causa Mortis?
For a Gift Causa Mortis, the donor must have a genuine belief of imminent death, the gift must be delivered to the recipient (either physically or symbolically), and the donor must actually die of the contemplated risk.
How does a Gift Causa Mortis relate to a Will or Last Testament?
A Gift Causa Mortis is separate from a will and can be given independently. However, if the gift is not in line with the will, then legal conflicts may arise.
Can a Gift Causa Mortis be disputed?
Yes, similar to any inheritance or gift upon death, a Gift Causa Mortis can be disputed. Disputes may arise when the conditions of the gift aren’t clearly met or if the gift contradicts the donor’s will.
Does a Gift Causa Mortis have any tax implications?
Gift Causa Mortis is subject to estate and gift taxes. It will be accounted for when calculating the value of the decedent’s estate and could lead to tax implications for the recipient. It’s always best to consult a tax professional or attorney for advice specific to your situation.
Related Finance Terms
- Donor: This is the individual who gives the gift in anticipation of their imminent death.
- Donee: This is the recipient of the gift. In the context of Gift Causa Mortis, it will be the person who receives the gift if the donor dies.
- Revocability: This refers to the ability to revoke or take back the gift. A Gift Causa Mortis can typically be revoked by the donor at any time before their death.
- Imminent Death: This is a key condition for Gift Causa Mortis. The gift is made in anticipation of the donor’s imminent death from a known cause.
- Testamentary Gift: This is a similar but distinct concept from Gift Causa Mortis. Testamentary Gifts are made through a will and only take effect after the donor’s death.
