A lifetime gift can be made for various reasons, whether to reduce inheritance tax liabilities, or simply so that the person making the gift (the donor) can see the benefit of their gift whilst they are still alive.
In the UK, there are rules and restrictions around what you can and can’t gift, and it is important that the individual transferring the gift is aware of these.
Unfortunately, there are instances where individuals are coerced into making a lifetime gift that does not reflect their wishes or best interests. This might happen through undue influence, fraud, or by someone taking advantage of a donor’s lack of mental capacity.
If your loved one has made a lifetime gift, and you have concerns that this was not in their best interests, or that fraud has taken place, you may be wondering what you can do to resolve the situation.
In this article we will discuss challenging a lifetime gift, including the grounds for doing so, and how you can get support.
If you would like legal assistance today, please get in touch with our specialist challenging lifetime gifts solicitors at Roythornes.
What is a lifetime gift?
A lifetime gift is a gift of assets or cash given by an individual (known as the donor) whilst they are still alive. It could include money, stocks and shares, property, land, or other high-value assets such as jewellery, antiques, or artwork.
In the UK, the lifetime gift law places strict regulations on the circumstances under which a lifetime gift can be legally given, and failing to meet these regulations can lead to you needing to pay inheritance tax on the gift.
For example, if the donor lives for 7 years or more after giving the gift, no IHT is incurred. If they pass away within 3-7 years, then the IHT will taper off slowly but still come into affect. If the donor passes away within three years, then IHT will come in at 40%.
What are the grounds for challenging a lifetime gift?
Unfortunately, donors are sometimes pressured or manipulated into giving lifetime gifts, and in these situations, family members may need to challenge the gift in question.
A few notable grounds for challenging a lifetime gift are:
- The donor lacks mental capacity and so could not have feasibly made this gift, or would not have in their right mind
- The donor would not have wanted the gift made or it contradicts their known preferences
- The donor was under undue influence, usually manipulated by someone in a position of trust, such as a power of attorney or a care-giver
- The gift was made without the proper documentation
- The gift was made under false or obscured pretences, such as with the belief that the money was being spent on healthcare services for the donor when it in fact went to another recipient
- The donation was made as a direct or indirect result of illegal or fraudulent activity
- The gift was made without the knowledge of a Power of attorney’s consent
- The gift was made without approval from the Court of Protection
If you would like to dispute a lifetime gift in the UK, it is advisable to get in touch with an expert solicitor as soon as possible.
Can you challenge lifetime gifts made by a solicitor?
In some circumstances, an appointed solicitor may have the authority to make a lifetime gift on behalf of a donor, for example, where that solicitor is acting as the individual’s Lasting Power of Attorney.
In such a situation, it is possible to contest a lifetime gift made by a solicitor. Challenging a lifetime gift made by a solicitor might involve questioning the validity of the gift based on concerns such as breach of fiduciary duty; improper conduct or conflict of interest; or where it is suspected that the gift does not align with the donor’s wishes.
Under UK law, solicitors are bound by strict professional standards to act in their clients' best interests, and any gifts made to them may be scrutinised to ensure they were freely given and properly documented.
If an appointed solicitor has made a lifetime gift on behalf of your loved one, and you are concerned that it does not reflect their wishes, it is advised that you seek legal support. Resolving the matter can help you to ensure that assets are distributed fairly and in accordance with the donor's true intentions, protecting the integrity of their estate.
Challenging a lifetime gift made by a solicitor is a complex matter, and therefore, it is important to seek expert legal support.
What are the steps to challenging a lifetime gift?
If you would like to dispute a lifetime gift, you can do so through alternative dispute resolution, or through litigation, where dispute resolution is unsuccessful.
You will likely need the legal support of a solicitor to assist you throughout the process, providing tailor-fit expertise, based on your situation.
You will need to determine your grounds for challenging the lifetime gift, for example, concerns that the individual who made the gift was manipulated into doing so.
Your solicitor will assist you to gather evidence that supports your claim, including financial records, witness statements, any correspondence relating to the incident, and medical records if the capacity of the donor is in question.
The matter may then be resolved through alternative dispute resolution methods such as mediation. If the defendant refuses to communicate or denies wrongdoings, and the issue cannot be resolved, you may need to go through Court proceedings.
Our team can work with you to gather additional evidence, notify the defendant, and submit your claim to the court. We’ll stand with you through every stage of the lifetime gift challenge process, providing robust representation all the way.
Depending on the grounds, you may be under a time limit for challenging the lifetime gift, and therefore, it is recommended that you seek legal representation as soon as possible.
Can a lifetime gift be challenged while the donor is still alive?
Yes, it is possible to challenge a lifetime gift whilst a donor is still alive, and the process is more straightforward, in comparison to when the donor has already passed away. For this reason, it is advised to proceed to challenge a lifetime gift as soon as possible.
If the donor is still living, the Court of Protection or the Officer of the Public Guardian can act in their best interest and ensure that their care-givers or powers of attorney are accommodating their mental capacity.
What is undue influence and how does it affect gift validity?
Undue influence is an unfortunate occurrence where someone uses their authority over another to influence their decision-making. In the case of lifetime gifts, it is when somebody persuades a vulnerable individual to make a gift that they may not otherwise have made.
This may be in the form of threats, deceit, fraud, manipulation, or an abuse of their dependent’s reliance on them. Certain relationships are more likely to allow for undue influence, such as a care-giver or a power of attorney.
Are there tax implications for challenged gifts?
If a gift is challenged successfully, then there are potential implications for inheritance tax calculations. The gift may be considered to be part of the deceased's estate, which may increase the likelihood of it being liable to pay IHT.
If the gift was given within the seven-year period before the donor's death, the taper release calculations may be affected and require assessment.
How can Roythornes help?
Roythornes regularly helps clients to challenge lifetime gifts and has much experience in this legal area, supporting clients in a diverse range of circumstances.
Our team takes a sensitive approach to private wealth disputes cases, taking the time to learn the finer details of your case, and help you work towards the best result possible in the situation. We will take a strategic approach to resolving the dispute, listening carefully to your concerns and supporting you every step of the way.
We can help if you are looking to recover a gift, or, if you are the recipient of a gift that another party has challenged. We also represent clients who made gifts and now regret it, for instance, where they now feel that they were taken advantage of.
Whatever your circumstances, if you need support, please don’t hesitate to get in touch.
Get in touch with our challenging a lifetime gift solicitors
To access legal support from our lifetime gift solicitors, including our private wealth team, please give us a call or complete our enquiry form today. We have legal offices in Alconbury, Birmingham, Nottingham, Spalding, or Langham.