Edward Lamplaugh was very fond of his housekeeper Deborah Carter. Ms. Carter had cleaned his home, mowed his yard, done his laundry, taken him on errands and accompanied him on doctor’s visits for a decade. As his health deteriorated, she also took charge of dispensing his medications and paying his bills; she wrote checks for his signature and managed his accounts. He had often joked that they should get married (though she described their relationship as more like a father and daughter), and he told her and everyone else who would listen that he intended to leave his money to her.

On June 6, 2002, Mr. Lamplaugh signed a check for $50 to Ms. Carter to pay her for the previous week, and she put the check in her purse. Three days later he apparently was in a particularly good mood, and he told her to prepare an $80,000 check, made out to her, and after he signed that check she put it in her purse as well. Ms. Carter had been trying to figure out how she could buy a local liquor store that was for sale, and Mr. Lamplaugh told her to use the money for the purchase. Besides, he said, if she owned her own business perhaps she could spend more time with him.

The next morning, with both checks still in her purse, Ms. Carter called at Mr. Lamplaugh’s home only to find that he had died sometime during the night. She notified his closest relative (his sister), arranged to change the locks on the doors, and then went to the bank to deposit the two checks.

When the bank called Mr. Lamplaugh’s home to confirm that he meant to write a large check to Ms. Carter they learned of his death. The bank then reversed the deposit, froze Mr. Lamplaugh’s account, and notified his sister, who Mr. Lamplaugh had named as his “payable on death” beneficiary on the account. Ironically, it was because of Ms. Carter's insistence that Mr. Lamplaugh's sister had been named on the account rather than Ms. Carter.

Ms. Carter filed a claim against Mr. Lamplaugh’s estate, arguing that he had made the $80,000 gift to her before his death. His sister and his estate, while not alleging any undue influence or other impropriety on Ms. Carter’s part, insisted that the gift had not been completed at his death because the money still sat in his checking account.

The trial court agreed with Mr. Lamplaugh’s family members. Since a check is just a request that the bank transfer funds, ruled the judge, the money still belonged to Mr. Lamplaugh at the instant of his death, and any gift he may have intended failed because he had not survived until the actual transfer.

The Nebraska Supreme Court disagreed. Citing banking law that requires the bank to honor checks written and signed before a decedent’s death, the state’s high court reasoned that Mr. Lamplaugh had done everything he could to complete the gift before his death by handing the check to Ms. Carter. She was entitled to receive not only her gift, but also her paycheck and reimbursement for the costs of changing Mr. Lamplaugh’s locks. Estate of Lamplaugh, January 20, 2006.

Although Mr. Lamplaugh's case makes the point that a gift can be considered completed by delivery of a check, it is important to note that the same principle does not apply in every other circumstance. For purposes of dating a gift for gift tax purposes, for instance, the date of cashing the check will usually control. In other words, an individual wanting to make a $12,000 gift in 2006 would be well advised to sign and deliver the check in early December, to make sure that the recipient can deposit the check and have it clear the donor's bank before the last day of the year.

Would you like to subscribe to Elder Law Issues? Simply provide your e-mail address and name below, and click "Subscribe". At the same time, you may choose to also subscribe to The Voice, the newsletter of the Special Needs Alliance.

Privacy note: We do not ever use your e-mail address or name for any purpose other than to send out our subscription-based newsletter. You can rest assured that we will not sell, trade or share this information with any other person or entity. We have no ancillary or associated companies or entities to which we could provide your e-mail address, either.

© 1993-2008 Fleming & Curti, P.L.C.
520-622-0400 /  FAX: 520-203-0240