The recent case of Kloosman v Aylen highlights the need to obtain proper legal advice and to openly discuss intentions before making large lifetime gifts.
Elderly parents who wish to benefit children, family or friends prior to death need to consider the consequences of doing so. They need to be clear and open about their intentions in making the gift, if they want to avoid family fights and court battles after their death.
A recent case highlighting this problem revolved around the Will made by Richard Frost in September 2007, when he set out that he wanted to leave a third of his estate to each of his daughters, Linda and Susan, and a third to his son and his grandchildren.
Shortly after making the Will he moved in with his daughter Susan and sold his house for £350,000. He knew that he was dying of bowel cancer, he thus made gifts of £100,000 to each of his daughters out of the proceeds of his house sale. He sadly died a few months later in March 2008. As a result of the gifts made during his lifetime, his estate amounted to £135,000.
The Executor of his Will, Mr Kloosman, did not know whether or not Mr Frost intended the gifts to the daughters to be treated as payments on account of the provisions set out in the Will and so he asked the Court to decide the matter.
The Judge was persuaded that Mr Frost made the gifts to the daughters to show his gratitude to them for looking after him and to compensate them for the expense incurred in doing so, and ordered that the estate should be distributed as set out in the Will without regard to the £100,000 gifted to them in his lifetime.
Unfortunately, no one will ever know for certain what Mr Frost intended. He may have assumed that it was obvious that the gifts to his daughters should be brought into account when his estate was distributed, but it is just as likely that that he never gave the issue a moment's thought.
What is certain is that he has left a legacy of ill will and division amongst his family by not stating his intentions. Perhaps if he had taken advice before making the gifts he could have made a properly informed decision, which his family might have found easier to accept the outcome.
