Challenge lifetime gifts

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A lifetime gift, as opposed to a gift made through a will upon one’s death, is a significant aspect of estate planning and financial matters that demands careful consideration.

Our team of specialists excels in offering guidance tailored to the intricacies of challenging lifetime gifts and loans.

In the realm of lifetime gifts, complexities may emerge that necessitate expert advice. These complexities could range from concerns about potential unequal treatment among beneficiaries to questions about the legality or fairness of a particular gift or loan arrangement. Our dedicated experts possess in-depth knowledge of the UK’s legal framework surrounding such matters, enabling us to provide comprehensive advice and strategies for addressing these challenges effectively.

Whether it involves contesting the validity of a lifetime gift or loan or seeking equitable solutions through negotiation and mediation, we are committed to helping you navigate this intricate landscape with confidence and clarity. Your financial well-being and peace of mind are our top priorities as we work together to safeguard your interests.

Scott Taylor

Scott Taylor

Partner | Private wealth disputes

01483 464274

What is a lifetime gift?

A “lifetime gift” refers to an asset, money, or property that is given from one individual to another during the Deceased’s lifetime, as opposed to a bequest or legacy, which is transferred upon their death.

What impact does a lifetime gift have?

Distributing substantial gifts of money and assets during an individual’s lifetime can notably diminish the value of their eventual estate, potentially negatively impacting beneficiaries designated in their will.

Additionally, during one’s lifetime, money or assets may be loaned to family members or third parties, intended to be repaid to the estate posthumously. However, there can be instances where recipients of such loans may subsequently assert that the loan was, in fact, a gift, contrary to the deceased’s intention.

It’s important for executors and beneficiaries to ascertain that a lifetime gift was conferred with the donor’s thorough knowledge and approval, and to determine whether it needs repayment to be made to the estate.

What is considered a lifetime gift?

A “lifetime gift” is generally considered to be any transfer of value (such as money, property, or other assets) from one individual (the donor) to another (the recipient) during the donor’s lifetime, with the intention of conferring a benefit on the recipient without receiving full valuable consideration in return. This is distinct from gifts or bequests that are distributed as part of an individual’s estate after death.

Lifetime gifts might be subject to various tax implications, such as Inheritance Tax, especially if the donor does not survive for seven years after making the gift, under the “seven-year rule”. Legal frameworks may apply differently, depending on the specific circumstances surrounding the gift, such as the relationship between the donor and the recipient, the value of the gift, and the timing of the gift, making it crucial to seek professional advice when making significant gifts.

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When can lifetime gifts be challenged?

Lifetime gifts can be challenged in several contexts under UK law, often in scenarios involving family disputes, estates, and wills. It is pertinent to note that challenging a lifetime gift is not a straightforward process and usually involves complex legal proceedings. Some of the typical scenarios where a lifetime gift might be challenged include:

Lack of mental capacity

If there is a question about the donor’s mental capacity at the time of making the gift, it can be challenged. The challenger would need to demonstrate that the donor did not understand the nature and implications of their actions when making the gift.

Undue influence

A lifetime gift can be challenged if it’s believed that it was made under undue influence. Undue influence implies that the donor was coerced or pressured into making the gift against their free will. Proving undue influence can be complex and usually requires strong evidence of coercion or manipulation.

Fraud or deception:

If the gift was obtained through fraudulent means or deception, it might be contested. This involves demonstrating that the donor was misled or tricked into giving away their assets.

Violation of insolvency laws:

A lifetime gift might be scrutinised if the donor becomes insolvent or is declared bankrupt after making the gift. The insolvency practitioner could investigate and potentially reverse the gift if it’s deemed to be a transaction at an undervalue or was designed to deprive creditors.

Infringement of family provision

In some cases, a lifetime gift may be challenged after the donor’s death if it appears to infringe upon the statutory rights of dependents or family members. Under the Inheritance (Provision for Family and Dependants) Act 1975, certain individuals can make a claim against the estate if they believe they have not been adequately provided for.

Breach of trust

If the gift was made by someone acting as a trustee and the transfer breaches their fiduciary duties, beneficiaries of the trust may have grounds to challenge the gift. Trustees are bound by specific obligations, and any gift that contravenes these can be subjected to legal scrutiny.

Non-compliance with formalities

In some instances, if the necessary legal formalities were not followed when making the gift, it might be invalidated. This often relates to documentation, witnessing, and other formal requirements under UK law.

How our solicitors can help

It is crucial to consult with a solicitor specialising in trusts, estates, and property law when considering challenging a lifetime gift, as these matters are heavily reliant on specific legal principles and statutory provisions.

Our solicitors at Moore Barlow can guide you through the process, assess the merits of your case, and advise on the appropriate legal options available to you.

We are here to help

Discover how our expert private wealth dispute lawyers can help you.

Contact our private wealth disputes team

Lifetime gifts: Frequently asked questions

Can a gifted property be contested?

Yes, a gifted property can be contested under various circumstances, such as suspicions of undue influence, lack of mental capacity of the donor at the time of the gift, or if the gift appears to be a deliberate deprivation of assets.

Typically, if there is no valid will providing for you, regardless of any verbal assurances from the deceased, you are not automatically entitled to anything. However, promises or gifts given either during the deceased’s lifetime or even just prior to death do provide grounds to potentially challenge the situation. You may also be able to challenge the basis on which the asset was transferred to the individual i.e. if it was a loan rather than a gift.

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