Wills and probate: When is a gift not a gift?

As people get older it is quite common to ask family members to formally or informally manage their finances, allowing access to bank accounts and assets. 

They may also want to make gifts to family and friends during their lifetime. 

Sadly, disputes can arise when informal arrangements are in place and ‘gifts’ made.  

In a recent court case an elderly woman allowed her daughter-in-law to informally manage her finances. 

She later claimed her daughter-in-law had, without authorisation, transferred money from her account, transferred ownership of her home, and contributed thousands to the purchase of another house.  The defendants argued these were gifts.  

The court found the defendants had abused the woman’s trust and the ‘gifts’ could not possibly have been considered as gifts as they were made without her knowledge and intention.  

Disputes can arise when informal arrangements are in place and ‘gifts’ made.

The court confirmed the importance of ensuring all parties to a gift know and understand the transaction is intended as a gift. Without proof of full knowledge and intent a gift can be challenged. 

If you plan to make a substantial gift, seek advice from your solicitor who will explain the consequences and can prepare a Deed of Gift.  If the gift was later challenged, this will evidence you understood and made the gift of your own free will.  

And if looking to minimise inheritance tax payable on your estate by making gifts of assets during your lifetime, a deed allows you to clearly record and track when and to whom the gift was made.

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