Recent Developments

Illinois Virtual Representation Statute has been updated and its scope broadened effective January 1, 2010. Now the trustee and beneficiaries may agree on a broad range of matters affecting the administration of a trust, including a decision to distribute it early. 760 ILCS 5/16.1

Gifts By Check Before Death Included In Estate

Checks written by a decedent to friends and relatives that were not paid until after the decedent's death were not completed gifts and, therefore, were includible in the decedent's gross estate. The decedent did not part with dominion and control over the gifted property because, under applicable state (New York) law, she had the ability to order that payment on the checks be stopped at any time until they were paid. The policy goals that led to the creation of the doctrine of "relation back," which was generally applied only in situations involving charitable donees, were not furthered by extending the doctrine to the present case. Thus, the doctrine would not apply where gifts were made to a noncharitable donee and the donor died prior to the payment date.

Estate of R. Rosano, United States Court of Appeals (2nd Circuit) 2001‑1 USTC ¶60,401,

Comment:
This Circuit Court of Appeals case confirms what is not widely known law: pre-death gifts made by check are not completed until the checks are cashed, or otherwise placed out of the decedent’s "dominion and control". If the check can’t be delivered to the donee and cleared before death, one way to insure such gifts will have a better chance of being considered "completed" is to do the following:

1. have the checks certified (which in most states has the effect of removing the funds from the account), or have cashier’s checks drawn on the account,

2. make (and document in writing) an irrevocable delivery of the check to an agent for the donee.

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