Two months ago, Sara Smith died in a local hospital after a long battle with cancer. Two days before her death, Sara made out a check on her personal bank account (maintained at Capital Bank), payable to the order of her friend Anne Jones, who had cared for Sara throughout her illness. In the presence of her doctor and two nurses, Sara handed the check (made out for $60,000) to Anne saying, “I want you to have this money. Thanks for everything.” The following day, Sara lapsed into a coma, remaining in a coma for an additional day until her death.

Because Anne had been busy taking care of Sara and was also in the process of moving to a new apartment, Anne did not deposit the check in her own bank account (maintained at Commerce Bank) until two days after Sara’s death. When Commerce Bank presented the check to Capital Bank for payment, Capital Bank refused to honor the check because it had received notification earlier in the day from Tom Davis (the administrator of Sara’s estate) instructing the bank not to honor any checks drawn on Sara’s account if those checks had not been presented for payment prior to Sara’s death.

When Anne learned that Capital Bank had not honored the check, she filed suit against Davis as the administrator of Sara’s estate, arguing that Sara had made an effective gift of $60,000. Davis denied that any effective gift had been made prior to Sara’s death, and argued that all of the money contained in Sara’s account should pass to the three family members named as devisees under the residuary clause in Sara’s will (which you may assume is valid).

30 minutes. Evaluate whether Sara made an effective gift of $60,000 to Anne, addressing the arguments Tom and Anne will make in support of their respective positions. If you feel that you need additional information to reach a conclusion, state what additional information you would want to discover, and how that information would influence your analysis.