Class Gift or Gift Nominatum

July 27, 2016 Suzana Popovic-Montag Wills Tags: , , , , 0 Comments

We have written over the years about lapsed gifts and the anti-lapse provisions contained in section 31 of the Succession Law Reform Act. A lapsed gift is one that fails because it is incapable of taking effect. One of the most common reasons that a gift is incapable of taking effect is that the beneficiary predeceases the testator. In determining whether the gift has lapsed, one must first determine what kind of gift it is – a class gift or a gift nominatum.

A class gift is made to a group of individuals who share a common characteristic – for example, “to all my grandchildren”. The testator may not have any grandchildren when they execute their will but want to provide for any future grandchildren; or the testator may have two grandchildren and could have more grandchildren in the future. With a class gift, the number of beneficiaries in the class may increase or decrease; it allows others to join in the gift after the will is executed. Membership in the class closes on whatever date is named in the will.

D54Z0NSBIS (1)The other type of gift, a gift nominatum, is a gift to a specifically named or identifiable person or persons – for example, “to John Doe”. In this case, the beneficiaries of this gift are limited to those named, which is to say that the will is closed once it is executed. If the beneficiary predeceases the testator, then the gift will lapse. Generally, drafting solicitors will insert gift-over clauses to prevent a lapse. A gift-over provision simply provides a gift of the property to a second recipient if a certain event occurs – like the death of the first recipient.

However, one must be careful with the language employed. Describing the beneficiaries by number is generally considered a gift nominatum, unless there is clear intention that the testator intended a class gift. Therefore, a gift to “my two grandchildren” will prima facie be considered a gift nominatum that is not open to new members. The only beneficiaries under this clause would be the testator’s two grandchildren at the time the will was executed. But a gift “to my grandchildren that survive me” is a valid a class gift.

It is important to ensure that the testator’s intentions with regard to the type of gift are clearly expressed, and if making a class gift, it is equally important to set out specific rules to determine when membership in the class closes in order to avoid future litigation. Finally, whether making a class gift or a gift nominatum, it is prudent to include a gift-over clause to avoid unintended consequences.

Thank you for reading.

Suzana Popovic-Montag

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