Elderly Man Lacked Capacity to Make Final Will
The High Court recently upheld a claim that an elderly man’s final will was invalid on the grounds that he lacked testamentary capacity. The man and his wife had...
Continue readingGifts made more than seven years before the death of the donor do not generally attract a charge to Inheritance Tax (IHT) on the donor’s death.
However, where the gift is of a particularly valuable item, it makes sense to create a deed which acknowledges the gift, because HM Revenue and Customs (HMRC) are known for challenging such arrangements if there is insufficient supporting evidence. In a recent case, the only evidence was in a simple letter.
HMRC challenged the claim by the son of a female doctor that his late parents had given him and his brother three valuable paintings in 1985 and that their aunt had gifted other paintings to them in early 1986 or 1991.
The son was the co-executor of his mother’s estate. He claimed that the paintings had not been physically transferred to him and his brother, who was the other executor, when they were gifted because at that time neither of them had a permanent address and for some time thereafter neither had suitable premises in which to hang them.
The case was complicated by the fact that before matters could be sorted out, his brother, who took a very different view of which paintings should or should not have been included in their late mother’s estate for IHT purposes, died.
There were a number of other complexities in trying to work out the legal status of the various paintings.
The argument ended up in the First-tier Tribunal, which decided the status of the ownership of the paintings as a matter of fact so that the IHT returns could then be finalised.
The argument would not have taken place had the gifts been made by way of a valid deed of gift.
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