A Personal Check Does Not Constitute a Completed Gift Until the Funds are Available to be Withdrawn and the Check is Presented and Paid

Honaker v. The Estate of Dorothy T. Haas, C.A. No. 7966-VCG (April 11, 2013)

In this case Vice Chancellor Glasscock affirmed long standing Delaware law and held that when a personal check is given to a donee with the intent to make a gift there is no delivery until the funds needed to honor that check are available to be withdrawn from the account and the check is presented and paid. Here, petitioners alleged that the decedent authorized her attorney-in-fact to give petitioners an inter vivos gift of $25,000 each. Petitioners argued that the decedent’s attorney-in-fact and the decedent’s financial advisor were supposed to liquidate the decedent’s assets to fund the account, but this never happened.

Although both parties acknowledged the general rule that gifts of personal checks are not complete until presented and paid, petitioners argued that the facts presented in their complaint warranted an exception to this rule because the checks were drawn at the decedent’s discretion by her attorney-in-fact, and because the checks were signed by one of the petitioners, a co-tenant of the joint checking account from which the funds would be drawn. But Vice Chancellor Glasscock held that “directing an agent does not make that act a delivery, where it would not be a delivery if made by the principal.”

Petitioners also argued that their circumstances were similar to circumstances where a donor gifts a certified check. But Vice Chancellor Glasscock dismissed that comparison, explaining that a “certified check represents a completed payment from a donor to the bank, and a contractual right on behalf of the donee,” where as a personal check “is simply a revocable direction to the bank to make payment, funds permitting.”