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Legally Valid Gifts

by Lisa Fenech

If a friend gave you a cheque and later passed away before you had the opportunity to cash that cheque, would you feel entitled to the amount that the cheque provided for?

In Teixeira v. Markgraf Estate the Court of Appeal for Ontario makes it very clear that you have no right to that amount.

The three necessary elements of a legally valid gift are as follows:

1)    an intention to make a gift on the part of the donor, without consideration or expectation of remuneration;

2)    an acceptanc eof the gift by the donee; and

3)    a sufficient act of delivery or transfer of the property to complete the transaction.

The critical question to determine the third element of delivery or transfer of the gift, is whether or not the donor retained the means of control and whether all that could be done had been done to divest title in favour of the donee. The evidence must demonstrate that the donor irrevocably surrendered control over the property. Any retention of an on-going interest or right in the property will negate the establishment of a legally complete gift.

In Teixeira a friend of the deceased attempted to cash a cheque from the deceased before the deceased passed away, however the bank was unable to give him the money due to insufficient funds. Although the Court determined that there was an intention to gift and the gift was accepted, the court also determined that the deceased had not delivered the money and therefore the cheque did not constitute a legally valid gift. The delivery of the cheque into the donee’s hand was not a sufficient act of delivery of the gift. The decease’s incapacity prevented the gift from being delivered and thus completed.