A gift in contemplation of death a gift of personal property (not real estate) by a person expecting to die soon for natural reasons. Federal tax law will treat this gift as part of the estate if the giver dies within three years of the gift. Treating the gift as made in contemplation of death has the effect of including the gift in the value of the estate, rather than making the gift subject to a separate federal gift tax charged the giver. If the giver recovers from an apparently fatal illness, the gift is treated like any other gift for tax purposes.
The elements of a gift in contemplation of death include:
- must be made in view of donor's pending death
- owner must die of the disorder or peril
- there must be delivery of the thing given
Constructive delivery is adequate to support a gift when:
- evidence of donative intent is concrete & undisputed
- every indication that donor intended to make a present transfer of the subject-matter of the gift
- when steps taken by donor to effect such a transfer must have been deemed by donor as sufficient to pass donor's interest to donee.
- donor must be competent to make the gift
- intent upon his part to do so
- acceptance by donee