Challenging a Lifetime Gift

Inheritance disputes do not always concern what is writtenin a Will. Sometimes the most significant issue is what happened to a person'smoney or property before they died.

A substantial amount of money may have been transferred to one family member. A property may have been transferred for little or no payment. An attorney may have made gifts using the donor's money. Alternatively, an elderly or vulnerable person may have given away significant assets in circumstances that other members of the family find difficult to understand.

These transactions are commonly referred to as lifetime gifts.

At DJF Solicitors, our contentious probate team advises clients in Bristol, London and throughout England on disputes involving lifetime gifts, Wills and estates.

What is a lifetime gift?

A lifetime gift is an asset voluntarily given by one personto another during their lifetime.

It can include:

• Money
• Property or land

• Investments
• Shares
• Jewellery or valuable possessions
• Transfers from bank accounts
• Other valuable assets

People are generally entitled to give away their own assets.

The fact that a parent gave substantially more to one child than another, for example, does not automatically mean that the transaction can be reversed.

However, there are circumstances in which a lifetime gift may be open to challenge.

Can a lifetime gift be challenged because the donor lacked mental capacity?

Potentially.

A person needs sufficient mental capacity to understand the transaction they are entering into.

The level of understanding required can depend upon the nature and significance of the gift. A modest birthday gift is very different from transferring a person's home or a substantial proportion of their wealth.

Concerns can arise where the donor was suffering from dementia or another condition affecting their ability to understand the transaction.

Relevant evidence may include medical and care records, financial documents, evidence from professionals involved in the transaction and accounts from people who knew the donor at the relevant time.

What is undue influence?

A lifetime gift may also be challenged where it resulted from undue influence.

This can become particularly relevant where the donor waselderly, vulnerable or heavily dependent upon the person receiving the gift.

For example, concerns may arise where someone becomes increasingly isolated from friends or family and then unexpectedly transfers substantial assets to the person upon whom they have become dependent.

Each case is highly fact-specific.

A large or unexpected gift is not automatically evidence of wrongdoing. The relationship between the parties, the donor's vulnerability, the circumstances of the transaction and the available documentary evidence all need to be considered.

What if an attorney made the gift?

Particular issues can arise where someone was managing another person's finances under a Lasting Power of Attorney (LPA) or Enduring Power of Attorney (EPA).

Being appointed as an attorney does not give someone unrestricted authority to give away the donor's money or property.

Attorneys have duties to the donor and their powers to make gifts are limited.

Certain reasonable gifts may be permitted in particular circumstances, but significant gifts outside an attorney's authority may require approval from the Court of Protection.

A substantial transfer to the attorney themselves, a member of their family or another person can therefore warrant investigation.

If an attorney has exceeded their authority, it may be possible for steps to be taken to recover assets or money.

Can a gift be challenged after the donor has died?

Potentially, yes.

The fact that the donor has subsequently died does not necessarily prevent the circumstances surrounding an earlier transaction from being investigated.

This is often how lifetime gift disputes arise.

Executors or beneficiaries may discover significant withdrawals or transfers when reviewing the deceased's financial affairs. A property which everyone believed belonged to the deceased may have been transferred before death, or bank statements may reveal substantial payments to one individual.

The central question is then why the transaction occurred and whether it was legally valid.

What evidence is needed?

Lifetime gift cases are heavily dependent upon evidence.

Depending upon the circumstances, investigations may include:

• Bank statements
• Land Registry records
• Medical and care records
• LPA or EPA documentation
• Solicitors' files
• Emails, letters and text messages
• Evidence from family members and other witnesses
• Previous Wills
• Financial and accounting records
• Evidence concerning the donor's health and relationships

It is important to establish the facts before making allegations of fraud, undue influence or financial abuse.

Our role is to examine the available evidence and identify whether there is a proper legal basis for challenging the transaction.

What happens if a lifetime gift is successfully challenged?

The remedy will depend upon the nature of the transaction and the legal basis of the challenge.

In appropriate circumstances, the court may be asked to setaside a transaction or require money or property to be restored.

Where the donor has died, recovering an asset may significantly increase the value of the estate available for administration.

This can have a substantial effect on what beneficiaries ultimately inherit.

Can lifetime gift disputes be settled?

Yes.

As with other inheritance disputes, court proceedings are not always necessary.

Once the parties understand the legal position and the evidence available, it may be possible to resolve the dispute through negotiation or mediation.

Where agreement cannot be reached, court proceedings may be required.

Our contentious probate team advises on both settlement and litigation, with the aim of identifying the most proportionate route to resolving the dispute.

Can I challenge a lifetime gift under a CFA?

Potentially.

DJF Solicitors offers a free 15-minute initial consultation to assess the circumstances of your case.

In appropriate cases, we may also be able to act under a Conditional Fee Agreement (CFA).

Whether a CFA can be offered will depend upon an assessmentof matters including the merits of the claim, available evidence, value of theassets involved, likely costs and proportionality.

Clients should understand that a CFA does not necessarily remove every financial liability associated with litigation. In particular, clients may remain responsible for disbursements, including court fees, barristers' fees, expert fees and other third-party expenses.

Read our guide: What is a CFA?

Lifetime gift solicitors in Bristol, London and nationwide

DJF Solicitors is one of the UK's fastest-growing law firms,with offices across England and teams assisting clients nationally.

Our contentious probate solicitors advise on lifetime gifts alongside Will disputes, Inheritance Act claims, executor and beneficiary disputes, proprietary estoppel and other contested estate matters.

If you believe a relative's money or property was given away in questionable circumstances, obtaining advice at an early stage can help establish what happened and whether there are grounds to take action.
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Arrange a free 15-minute consultation

If you are concerned about a lifetime gift or substantial transfer of money or property, we offer a free 15-minute initial consultation to assess your case and discuss the potential next steps.

Where appropriate, we can also assess whether your case maybe suitable for a Conditional Fee Agreement.

Make an enquiry here and a member of our contentious probate team will contact you.

 
Call us today on 0203 504 9138, or email us at info@djfsolicitors.co.uk to schedule your free initial telephone consultation.
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Article by Nicole Nedungadi, Private Client Solicitor at DJF Solicitors

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