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Lifetime gifts declared invalid by High Court due to undue influence

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The High Court in London has this week given their ruling in the case of Hart v Burbidge [2013] EWHC 1628 (Ch), which saw a family in dispute over their late mother’s estate. Rather than challenging any Will, or the estate itself, the children were in a dispute over gifts made by the deceased, in the year before she died.

Phyllis Hart had passed away in 2008. Prior to her death, she had made various transfers of cash and property to her daughter Susan Burbidge and her husband Brian, of around £700,000. Susan and Brian had repaid around £410,000 to the estate before the case was brought to Court. Phyllis’ sons Ken and Paul accused their sister Susan of having unduly influenced their “vulnerable” 86 year old mother, taking control of her finances, in the final months of life. Susan argued against this, and explained that the gifts were rational, as her brother Ken had not visited their mother in a long while.

The general rule with lifetime gifts is that a person is free to gift their money or property to whoever they wish, so long as they have sufficient mental capacity to do so, and so long as their decision is free from any undue influence by someone likely to benefit from the gift. The first thing that the Court has to take into account is whether or not the gifts are rational, or whether they ‘call for an explanation’. The Court will then look at the nature of the relationship between the person making the gift, and the recipient. If the relationship is one of ‘trust and confidence’, then it is up to the recipient of the gift to prove that they did not exert undue influence.

In this case, the Judge Sir William Blackburne found that the gifts did require an explanation. He commented in his judgment, “at the end of the day it is for Susan to persuade me that her mother was acting fully independently of this undue influence. I am not persuaded that she was”. The judge was concerned that Phyllis had not really understood the many letters she signed shortly before her death.

The judge therefore declared that the gifts were invalid, and had to be repaid to the estate. Susan and her husband Brian were ordered to repay the balance of the gifts, £290,000, to her mother’s estate. The judgment does not refer to her brothers’ legal costs, but it would be usual with a decision such as this, for Susan and Brian to be ordered to pay those costs as well. These costs are likely to be very high given the length of time that the dispute has been ongoing.

As a solicitor specialising in Inheritance Disputes, and also as a registered member of the Association of Contentious Trusts and Probate Specialists (ACTAPS), it is important that the cost implications of cases like this are considered from the outset.  Options such as mediation or Alternative Dispute Resolution should always be considered at an early stage to try and reach settlement without costly court proceedings.

By associate solicitor, Heather Korwin-Szymanowska

Anyone facing this kind of inheritance dispute with their family members, or wishing to contest a will for any other reason, should always seek specialist legal advice at the earliest opportunity. For a fixed fee of £49.95, you can have a 30 minute appointment with Heather or another solicitor who specialises in your kind of case.  The appointment can be either on the telephone, or face to face, depending on your preference. We will take some details from you before the appointment, and then the solicitor will discuss your case with you, and what your options are. If your case is something that we can then help you further with, we can then discuss your funding options with you.