Deceased gives cheque but cashed after death

Deceased gives cheque but cashed after death

In a recent case regarding a disputed estate an issue arose as to whether a cheque not cashed before the deceased’s death should regarded as a gift or whether the money was to be returned to the deceased estate.

The case also raised important questions as to where a person resides at the time of death and jurisdiction of the Family Provision Act 1982 (NSW).

The critical questions in determining whether a person contesting a will under the Family Provision Act will be successful are; has the person made out a claim for relief on the facts, and if so what provision should be made for them.

The deceased lived almost his entire life in New South Wales and the address given on his will was in NSW. He moved to Queensland and died 3 weeks later. An important question arose as at the date of death was the deceased domiciled in New South Wales his domicile of origin, or Queensland as a domicile of choice. The court held that a person retains their domicile of origin unless they adopt a domicile of choice, which requires them to be lawfully in the new state and have the intention of remaining there indefinitely. Provided the intention could be proved the length of time in the state is immaterial.

This was an important question as the law of NSW is that there is no jurisdiction under the Family Provision Act for a court to make an order affecting real property (e.g. land) outside New South Wales if the person was domiciled out of NSW. The deceased owned property in Queensland as well as liquid assets in NSW.

In this case the deceased was aware that he was dying and had drawn a cheque as a gift. However the cheque was not deposited until a day after the deceased died. The cheque was paid and the money transferred to another account.

The court said the gift was imperfect because even though the bank honoured the cheque as the cheque had not been cleared as at the date of death the money formed part of the deceased estate. The next question was should the money be repaid to the estate.

On this question the court considered the intention of the deceased and found that it was clear that the payment was a gift and that the bank paid the cheque before being notified of the death. It also considered the effect of the Cheque Act 1986 (Cth), community usage of cheques together with modern judicial reasoning. The court concluded that although the established legal principle is that Equity will not usually assist someone who has an imperfect gift it will not strive officiously to defeat them. As a result the person who had received the gift in this case was able to retain the money and did not have to repay the estate.

This case addresses some of the critical aspects of contested will litigation and illustrates how the law evolves to deal with modern circumstances using the rules of Equity, precedent law as will as applying and interpreting relevant legislation.

See our Will Dispute Lawyer page for more information on the Wills & Estates services we provide or contact us for advice specific to your situation.