Tips to leaving a financial gift in a will
The recent court case of Leonard Taylor is a stark reminder not to count one's chickens when coming into substantial amounts of money or property.
There can be issues when those who would otherwise benefit are prepared to involve the courts to interfere with what was perhaps the deceased's intention for sometimes large sums.
Whether bestowed by a will, or "gifted" before death, the crucial witness - the deceased - cannot provide the evidence needed to clear up any debate.
Seventy-two year-old Mr Taylor had been Doris Luker's live-in partner for 15 years. In her will, she left him her home, its contents and £28,000.
The remainder of her estate was to be split between the British Heart Foundation and the Cancer Research campaign.
A week before Mrs Luker died, she gave Mr Taylor a cheque for £61,000. The executor of Mrs Luker's estate, with the backing of the charities, brought court proceedings to get the £61,000 back.
On 3 November, the Court of Appeal decided that Mr Taylor had to give it back. Now, eight years after Mrs Luker's death, he faces substantial legal costs far in excess of the £61,000.
Burden of proof
One can, of course, make a gift to whoever one chooses, but irrespective of whether the gift is made under a will or made shortly before death, there is always the chance that someone, somewhere, will question it.
Mental capacity to make the gift may be an issue in either case, but the burden of proof can differ.
Capacity will generally be assumed if made during lifetime, but it must be proved if made under a will.
Even if the gift was validly made, if it was made in the six years preceding death with the intention of defeating a later claim from a dependant of the donor, such as a spouse or child, the recipient may still be ordered to pay it back - even if they no longer have it.
The validity of the gift might also be questioned if procured by undue influence. This also differs in meaning, dependent upon whether the gift in question was made under a will, or during lifetime.
Pre-death gifts do diminish estates, so they need to be fully investigated by executors. If they are not, executors are vulnerable to allegations that they have not fulfilled their duty, and are themselves potentially liable for the value of the gift.
In Mr Taylor's case, had he been married to Mrs Luker, the law may well have stepped in to presume the £61,000 was for Mr Taylor's advancement and therefore a gift which need not be repaid.
That legal presumption has traditionally also been applied to lifetime transfers to children.
For Mr Taylor, the law presumed instead that he held the £61,000 on trust for Mrs Luker's estate, or that it was a loan. Either way, it had to be repaid.
This presumption could have been rebutted with evidence that Mrs Luker had intended to make a gift, but she could not of course give any.
Mr Taylor also had a second legal hurdle to contend with - that of undue influence. The court said that even if the £61,000 had been a gift, it was invalidated by undue influence.
The presumption of undue influence can arise out of a relationship between two people where one has influence over the other, and where there is also a lifetime transaction which calls for an explanation.
It is down to the recipient to show that the person making the gift did so of their own free will.
Undue influence means something else altogether in the context of gifts made by a will. Here, there must be either coercion or fraud, and it is up to the person alleging undue influence to prove it.
It is therefore seldom alleged, but gifts made under a will can be attacked in many other ways, such as lack of capacity.
The courts can, and do, frustrate that which, on the face of the will at least, was the intention of its maker.
So how do you prevent your nearest and dearest ending up with a huge liability for legal costs from a fight to keep that which you want them to have?
The answer is that you cannot for certain, but you can take steps to minimise the prospect by taking the right advice, being aware of what can happen, and preparing for it.
If you are going to make a lifetime gift, make sure there is evidence of your intention. If there is the potential for an undue influence allegation, make sure there is some evidence to address it, such as documented independent legal advice.
If you are going to cut someone out of a will, take advice and understand the claim they could make.
Perhaps try to discourage it, if appropriate, by leaving a small something which the potential claimant will receive only if they do not claim more.
And do not be offended if your solicitor asks you to undergo a medical examination. The purpose is to minimise the prospect of someone alleging you did not understand what you were doing when you are no longer around to tell the court otherwise.
And if you receive a gift, take note, you may one day be ordered to pay it back.
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