What is a lifetime gift?
Many people may gift their money or assets to others during their lifetime. This is known as making a lifetime gift.
The gift may be made as part of their estate planning process, or to assist their relatives or friends. It may also allow the person making the gift (called the donor) to be able see how the gift is used during their lifetime. However, sometimes lifetime gifts may require investigation. See our blog Financial abuse of older or vulnerable adults.
What is the effect of a lifetime gift?
If large gifts of money and assets are made during the donor’s lifetime, it can deplete the size of their future estate. This can adversely affect the beneficiaries under the donor’s will.
Sometimes, a person may also loan money or assets to a family member or third party during their lifetime, which should be repaid to their estate after their death. In some cases, loan recipients may later try to suggest that the loan was transferred into a gift, when that is not what the deceased intended.
It is therefore important for executors and beneficiaries of an estate to be able to confirm that a lifetime gift was made with the donor’s full acknowledge and consent. Also, whether a loan should be repaid to the estate.
When can lifetime gifts be challenged?
You may be able to challenge a lifetime gift if:
- The donor did not have the mental capacity required to make the gift
- The donor was coerced into making the gift
- The donor’s attorney (under an Enduring or Lasting Power of Attorney) made a gift on their behalf without obtaining approval of the Court of Protection
- The gift was made without the donor’s knowledge or consent
What is deprivation of assets?
Sometimes, lifetime gifts are also made deliberately to try to avoid:
- paying care fees;
- creditors of being able to use the estate to recover debts; or
- a claim being made against the estate
This may be a deliberate deprivation of estate assets and can cause problems for an estate.
Our solicitors can provide specialist advice on challenging lifetime gifts and loans. Contact us to arrange a free initial 30-minute telephone consultation.
Frequently Asked Questions
In some cases. Some people are authorised to make transfers or gifts on behalf of another person e.g. an attorney acting under an Enduring or Lasting Power of Attorney or a deputy. However, attorneys and deputies must account for any gifts made and some larger gifts cannot be made without obtaining permission from the Court of Protection.
It is possible to challenge lifetime gifts whilst the person who made the gift (known as the ‘donor’) is still alive or after their death.
If you are concerned about a lifetime gift, you should consider obtaining specialist legal advice as soon as possible.