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What is a lifetime gift?
A lifetime gift is where cash or assets are given away during a person's lifetime. These gifts can be made for any number of reasons, such as birthdays, weddings, to help with education costs or simply to assist a friend or family member who is in need. Some people choose to make a lifetime gift to provide beneficiaries with the resources they need at present, rather than having to wait until a person has passed away. Some donors take please in seeing the recipient enjoying the benefit of that gift
Such a gift can be tax-efficient since when cash or assets are given away during a person's lifetime it has the effect of reducing the value of that person's estate and can reduce the amount of inheritance tax due after death.
Rules about lifetime gifts
- A lifetime gift must be made of the donor’s own free will and they should not have been pressurised into making the gift.
- The donor must have had the mental capacity to make the gift at the time it was made.
- An attorney or a deputy can only make a gift on behalf of a donor within the powers granted to him or her. There are strict rules on this: https://www.gov.uk/government/publications/giving-gifts-a-guide-for-deputies-and-attorneys/opg2-giving-gifts-for-someone-else-web-version
- A gift cannot have been made fraudulently by another person.
Reasons to challenge a lifetime gift
Lifetime gifts may be challenged for the following reasons:
- The donor was pressured or coerced into making the gift
- The donor did not have mental capacity to make the gift
- An attorney made the gift without approval of the Court of Protection
- The deceased was not aware of the gift
- If the gift was as a result of fraud
Gifts can also be challenged if they were intended to evade the law in some way, such as to stop creditors taking part of the estate to settle debts once the person has died or to evade care home fees.
Who can challenge a lifetime gift?
Lifetime gifts will reduce the value of an estate, so potentially anyone named in a Will might wish to challenge a lifetime gift.
If you believe that a lifetime gift may have been invalid e.g. due to undue influence or lack of capacity then you can challenge the validity of that gift.
Equally if your inheritance has been reduced due to a gift made during the deceased's lifetime, it may be worth investigating that gift.
If a successful challenge is made, the asset or money could be returned to the estate to be dealt with in accordance with a Will or intestacy.
To mount a successful challenge it will be necessary to gather relevant evidence. Our team can advise on the process. Contact Kax Chana on 01827 317070 or kchana@ pickerings-solicitors.com.
What if you have received a lifetime gift and it is being challenged?
If you have received a gift from someone during their lifetime that is now being challenged by a personal representative or a beneficiary of their estate, we can assist you in defending that claim and help you to gather evidence to show that the gift was made validly. We can also advise on the merits of your case and any options for resolution. Contact Kax Chana on 01827 317070 or kchana@ pickerings-solicitors.com.
