In the context of wills and estates, there are numerous ways to gift financial assets like bank accounts (or their contents) – a bequest in a will, a trust, a beneficiary designation, adding the intended recipient to the account as a joint account holder, inter vivos e-transfers, and even writing cheques. An interesting question yet to be answered in Canada, however, is whether a donor can gift a bank account by providing the intended recipient with the donor’s debit card and the information needed to access the account, including the donor’s PIN and online banking credentials.
The High Court of Justice of England and Wales recently tackled this issue in Rahman v Hassan,[2024] EWHC 1290, confirming that a donor can make a valid donatio mortis causa (“DMC”)by handing over access to their online banking information.
The facts
Three days prior to the donor’s death in Rahman, he provided the donee with his login details for his online bank accounts and also “handed over bank cards, cheque books, and login devices, pin readers, and other security items.” The donor also told the donee that he wanted him to have everything.
By way of context, a little more than two weeks prior to the donor’s death, his wife had passed away unexpectedly. After this happened, the donor became increasingly fatalistic, believing he had only a short time left to live. He told friends and family that he wished to leave his property in the UK to the donee, who, over several years, had developed a close relationship with the donor. Prior to the wife’s death, the donee had supported the donor and his wife with daily tasks and had even moved into the donor’s home. After the donor’s wife died, the donee continued to care for the donor.
Following his wife’s death, the donor instructed a solicitor to prepare a new will naming the donee as his sole beneficiary and executor – however, the donor passed away before the will could be executed.
The gift to the donee was contested by the deceased’s in-laws, who were named as the beneficiaries under the donor’s last properly executed will. As a result, the court was asked to determine whether the gift was valid.
The bank accounts could be gifted through a donatio mortis causa
The court determined that the donor effectively gifted his online bank accounts through a valid DMC, as the evidence established that the donor was contemplating his imminent death when he gave the donee access to his online banking. He had stopped taking his medicine, and had declared his intention that the donee should have his estate. The court also found that the gift was conditional on the donor’s death, and that the donor did nothing to revoke the gift before he passed away.
Additional requirements that must also be satisfied to gift a chose in action like a bank account through a DMC were also met:
- An indicium of title was transferred to the donee
Justice Matthews held that the login and password for online accounts “are the indicia of title in the computer age,” as they serve to identify the user as the account holder. While providing the login and password effectively transferred indicia of title in Rahman, Justice Matthews noted that whether this action transfers title in other cases will ultimately depend on the intent of the donor. For example, providing access to an online account for a limited purpose, like effecting a single transaction, will not provide an indicium of title to the entire account, even if a donor provides the donee with their login details and password. - The accounts were delivered to the donee
While there is no physical object to “deliver” when dealing with a chose in action like a bank account, Justice Matthews noted prior case law which held that delivery could be achieved by transferring deposit notes, certificates, or passbooks. He went on to note:
That era has now almost completely gone. In the modern era, such accounts are conducted with the aid of computers… Access to these computer accounts is generally by way of security devices such as tokens and passwords which customers are exhorted never to write down or give to other people, although many do.”In today’s world, the court reasoned that the provision of login details, passwords, security devices and bank cards are the functional equivalent for delivery of a bank account.
- The donor parted with dominion over the accounts
The court confirmed that providing the device/login and password for an online account was a “means of accessing the subject matter” of such gifts, and thereby amounted to dominion. Justice Matthews also observed that the donor relinquished his control over the gifted property by providing the donee with all of the papers containing the details of the logins and passwords. The donor effectively put his accounts beyond his own reach, as he could not possibly have memorized all of the details for his many accounts.
While a valid DMC was recognized in this case, it is still advisable to execute a will when possible, rather than rely on the courts to uphold a deathbed gift. A number of requirements must be satisfied for a DMC to be recognized as valid. Executing a will, in comparison, is simpler and also in most cases, less likely to give rise to litigation.
Thank you for reading, and enjoy the rest of your day!
Ian.