Lifetime gifts, undue influence and unauthorised transactions
Gifts are often made during people’s lifetime. If someone has capacity and is not unduly influenced, they are free to make gifts as they please. Sometimes, however, circumstances may arise when a gift appears suspicious and there may be cause for concern that undue influence may have been exerted over the donor of the gift.
There are two types of undue influence: actual and presumed. Actual undue influence will be overt acts of improper pressure or coercion, such as unlawful threats. Presumed undue influence arises from a relationship.
Unlike undue influence relating to Wills, a presumption of undue influence will arise where gifts are made within certain categories relationships (for example, parent/child, doctor/patient) and when a gift is made to a person in whom the donor of the gift places trust and confidence which requires an explanation. If a presumption of undue influence arises, the court will infer that the transaction was as a result of undue influence unless there is sufficient evidence produced to show that this was not the case.
Another type of claim that arises in relation to vulnerable people is unauthorised transactions. For example, if an attorney or deputy is appointed to assist with a person’s affairs, there are restrictions on the transactions they can make. If they make a transaction which was: not approved by that person (when the donor retains capacity); not in their best interests; or not permitted by the document giving that person’s authority to act (for example, a Lasting Power of Attorney, Enduring Power of Attorney or a Court Order, that transaction may be an unauthorised transaction. A transaction may also be made by a person who has no right over the donor’s assets, in which case the transaction would be deemed unauthorised. If a transaction is unauthorised, it will be void and the money or asset must be returned to the donor.
If you are concerned about a gift or transaction made, we have a team of specialists who can advise on making a report to the Court of Protection and/or making a claim in relation to the gift or transaction.
If you wish to discuss any of the issues arising from this blog, please feel free to contact me at firstname.lastname@example.org or 01202 057768.