April 28, 2026
Recent Judgments
People often try to make meaningful gifts near the end of life, sometimes informally and without updating their will. A common example is a cheque written to a family member, caregiver, or friend as a gesture of thanks for the care they provided during the donor’s lifetime. But what happens if that cheque is not deposited before the donor dies?
Canadian courts have been consistent on this point: a gift made by cheque fails if the cheque is not cashed and cleared during the donor’s lifetime. Even where the donor’s intentions are obvious and sympathetic, the funds will be treated as part of the estate and must be returned. This outcome flows from long‑standing principles governing gifts and the legal nature of cheques.
Why a Cheque Is Not a Completed Gift
For a gift to be legally effective, the donor must intend to make the gift and must complete it by delivering the property to the recipient. British Columbia courts have repeatedly emphasized that the donor must do everything necessary to transfer the property and place it beyond their own control (see, for example, Costiniuk v. Official Administrator, 2000 BCSC 1372, aff’d 2002 BCCA 125; McKendry v. McKendry, 2017 BCCA 48).
A cheque, however, is not money. It is merely an order to the bank to pay money in the future. Until the cheque is deposited and clears, the donor remains in control of the funds and can revoke the instruction by issuing a stop payment. For this reason, courts have long held that a gift by cheque is not “complete” until the cheque is actually paid.
This principle was articulated as early as 1868, when Lord Romilly stated in Hewitt v. Kaye (1868), L.R. 6 Eq. 198, that a cheque “is nothing more than an order to obtain a certain sum of money” and that if the order is not acted upon during the drawer’s lifetime, “it is worth nothing” (as quoted in McMillan et al. v. Brown, 1957 CanLII 444 (NS SC)).
What Changes When the Donor Dies
Under section 167 of the federal Bills of Exchange Act, a bank’s authority to pay a cheque is terminated by notice of the customer’s death. Once death occurs and the bank is notified, a non‑certified cheque cannot be honoured.
Courts have repeatedly applied this rule across Canada. In Teixera v. Markgraf Estate, 2017 ONCA 819, the deceased wrote a cheque for $100,000 to her neighbour in appreciation for his help with errands and household tasks. She died six days later. Once the estate trustee notified the bank of her death, the account was frozen and the cheque could not be cashed. The Ontario Court of Appeal held that the gift failed because it was never delivered through payment during the deceased’s lifetime.
The rule still applies even if a donee successfully cashes a cheque after the donor’s death, but before the bank freezes the deceased’s accounts. In Deziel v. Deziel, 2024 ONSC 5279, the deceased delivered a $40,000 cheque marked “GIFT” to her caregiver approximately two weeks before her death. The caregiver delayed cashing the cheque out of concern that the deceased might still need the money. After the deceased died, the cheque was deposited. Despite the deceased’s clear intention and the caregiver’s good faith, the court ordered the funds returned to the estate, holding that the cheque became non‑negotiable upon death and that the essential element of delivery was never met.
Further, the same reasoning has been applied to promissory notes. In Peden v. Gear, 1921 CanLII 431 (ON SC), a father gave his daughter two promissory notes as gifts and paid one during his lifetime. He died before paying the second. The court held that the unpaid note could not be enforced against the estate, explaining that a donor’s own unpaid cheque or promissory note cannot form a valid gift if it is not paid during the donor’s lifetime.
Possible Exception
One exception to the rule is in the context of a certified cheque. Certification by the bank appropriates the funds and removes them from the donor’s control, which may allow the gift to survive death. By contrast, an ordinary personal cheque will not.
Takeaways
Trying to make last‑minute or informal gifts by cheque is risky, because there is no guarantee the gift will actually take effect if the recipient delays cashing it. As the cases above show, this can lead to unnecessary disputes between friends and family members and lead to confusion about who is entitled to the funds. Ultimately, it means that a gift that was genuinely intended may fail for no good reason.
The takeaway is simple: cheques are an unreliable way to make gifts, particularly near the end of life. With proper estate planning and legal advice, intended gifts can be made in a way that is clear, effective, and far less likely to result in conflict or litigation after death.
To ensure your wishes are carried out as planned and to avoid a well-intentioned gift failing unnecessarily, contact our estates and trusts team for advice.