There are all sorts of reasons why individuals may decide to make gifts to someone, usually of money, personal belongings or property. Provided the gift was made by somebody who fully understood what they were doing who made the gift free from any undue pressure from the recipient, the gift is likely to be valid. If however, there are suspicious or worrying circumstances surrounding the gift then it may be subject to challenge.
These concerns can arise either when the person who made the gift is still alive or after their death during the administration of their estate. When the recipient of the gift is an executor or administrator of the estate, they can be placed in a position of conflict between their duty to act in the best interests of the beneficiaries and their own personal interest. This may mean that they should be replaced by an independent administrator.
In some circumstances it is unclear whether a particular transaction was intended as a gift or whether it was a loan or other arrangement, such as an agreement for assets to be held on trust. Money may have been transferred into someone else’s bank account in an attempt to avoid nursing fees or other liabilities, without it being intended as a gift. The law can also apply a presumption of advancement, where a recipient of a gift is also a beneficiary under the same individual’s will.
Common areas of concern include gifts that have been:-
- Made in circumstances where the individual had lost capacity or may have been subject to undue influence or pressure;
- Made by an attorney acting under a power of attorney for their own benefit without seeking prior approval from the Office of the Public Guardian;
- Made for the benefit of an individual that has assumed a position of trust and responsibility over the donor’s financial affairs, which can give rise to a presumed undue influence;
- Hidden or obscured, for example by suggesting that money was spent on the donor when in fact it has been passed to the recipient;
- Made in direct contradiction to the known wishes of the doner – for example personal belongings promised to someone else;
- Made in a way that fundamentally upsets the distribution of the estate between the beneficiaries of the will;
- Made without proper documentation and could have been intended as loans to be repaid or brought into account.
The status of gifts in the context of the administration of an estate can also have significant consequences for the Inheritance Tax position which requires expert advice to ensure that the estate does not pay more tax than is necessary.
Whether you are seeking to uphold a gift that has been made to you or challenge a gift made to someone else, we are able to provide you with the necessary expert advice.
What are the costs involved in challenging lifetime gifts?
The cost of resolving disputes can be substantial, sometimes outweighing the value of the dispute itself.
To help clients manage the costs, we offer a range of funding options. From traditional ‘pay by the hour’ arrangements to fixed fees in certain situations, our aim is to take the uncertainty out of the costs of litigating and, where appropriate, to share the risk with you.
Key Contact
James Wallace
Contentious Trusts & Probate Partner
James is a Partner in the firm and leads the dedicated Contentious Trusts and Probate team. He deals with complex and high value estate and trust disputes including those with a cross-border or overseas element.
