How Do I Challenge a Lifetime Gift?

INTRODUCTION

If you believe a lifetime gift was made under questionable circumstances or against the wishes of the person who made the gift (the Donor), you can certainly challenge the gift.

This article explains a lifetime gift and how it can be challenged under English law.

WHAT IS A LIFETIME GIFT?

When somebody gifts money or assets to somebody else during their lifetime, rather than through their Will, this is known as making a 'lifetime gift.'

That gift may be included in the estate planning process. However, you should be aware that they may be subject to investigation and potential challenges, so it's essential to understand their impact when a gift is made.

FIRST, UNDERSTAND THE IMPACT OF A LIFETIME GIFT

When an individual makes a lifetime gift, this usually reduces the size of their Estate, which, in turn, can affect the Beneficiaries under a Will.

For example, when a person loans money or assets to a family member or other individual while they are still alive, it's important to distinguish between a loan that is expected to be repaid to the Estate and a gift. Often, Beneficiaries may not make these intentions clear, or Executors may fail to pick up on this vital difference. 

UNDER WHAT CIRCUMSTANCES CAN A LIFETIME GIFT BE CHALLENGED?

A lifetime gift may be challenged under the following circumstances:

• Coercion: Was the Donor forced into making the gift?
• Contentious probate: Is there a dispute over how the Estate is administered?
• Fraud: Was the gift made as part of a fraudulent transaction?
• Lack of consent: Example: did the Donor's solicitor - under an Enduring or Lasting Power of Attorney - make a gift on their behalf without first obtaining the proper Court of Protection's required approvals?
• Lack of knowledge: Was the gift made without the Donor's knowledge?
• Mental incapacity: Is there any evidence that the Donor was not able to understand the gift?
• Technical issues: Were there issues with the Will itself?
• Trustee removal: Does the challenge wish to remove a Trustee?

WHAT IS THE CONNECTION BETWEEN A LIFETIME GIFT AND "DEPRIVATION OF ASSETS"?

Sometimes, lifetime gifts are also made deliberately to try to avoid certain situations. For example:

• Avoidance of care fees: it could be argued that a lifetime gift is a form of intentionally reducing the size of your Estate to avoid or reduce the cost of care services provided by a local authority.

• Debt recovery: creditors may try to recover debts and target the Estate.

• Legal claim: a claim may be made against the Estate.

HOW DO I CHALLENGE A LIFETIME GIFT?

• Legal Right: anybody challenging a lifetime gift must have the legal right to do so. Typically, the individual who would have inherited the property or assets, if not for the gift, holds the right to challenge the lifetime gift. Of course, each case is different, and the outcome will depend on the circumstances of the case.

• Timeframes: Be prepared for a potentially lengthy, expensive process, and there's no assurance of a guaranteed outcome.

• Time Limits: There's also a six-year window from the date the gift being made, after which it will be too late to challenge the gift. There are some exceptions to this time limit, depending on the intricacies of each case. 

Need to know more or you’d like to discuss your options?

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