Presumed Undue Influence on Lifetime Transactions

Losing a parent can be a stressful and traumatic time for families, but when this also involves a dispute over the estate administration and lifetime transactions, it can lead to the need for Court proceedings.

Our specialist Inheritance and Wills Disputes Solicitors have experience in dealing with lifetime gift and lifetime transaction disputes and, in this case, were able to recover over £30,000 owing to our client.

Often when a parent dies, one of the siblings will take control over the estate administration to gather in the assets and to distribute the estate. In this case, Court proceedings were brought by our client against her brother in respect of his dealings with their late mother’s estate. Our client was initially concerned that there had been a 4-year delay on the part of her brother to produce the estate accounts and to finalise the distribution of the estate.

Lifetime Transaction Dispute

It was only following our instruction, four years after her mother’s death, that our client was able to see a copy of her late mother’s Will. On receiving the Will, our client was surprised to learn that under the terms of the Will, she was in fact, a Co-Executor and was equally entitled to administer the estate as her brother.

Our client also discovered that although she was entitled to half of the residue of the estate, this would not include her mother’s property, being the main asset in the estate, as this had already been transferred into the joint names of her mother and brother during her mother’s lifetime and therefore passed to her brother automatically by way of survivorship. This meant that the inheritance our client would receive was minimal.

The transfer of the property raised concerns with our client, as this had never been mentioned by her brother after her mum’s death, nor by her mother in her lifetime. Not only was the house not to be included in the estate, our client was also informed that there were minimal monies left in her mother’s bank account when she died and the payment she had already received from her brother represented her entire half share of the estate. This caused our client to query the estate assets, as she was aware that her mother had inherited a large amount from her sister-in-law only 3 years prior to her mother’s death.

“Cases like this can be complex and emotionally challenging, but it was obvious here that it was our client’s mother’s wish for her children to inherit her estate equally between them. She had made them joint executors of her Will and as such expected all assets to be shared. Our client was confident that her mother would not have understood the nature of the transfer of the property and believed it would form part of her estate,” said Solicitor and Head of Inheritance & Will Disputes Department Laura Pracy.

During the court proceedings and on disclosure of the bank statements, it transpired that our client’s brother held several bank accounts, a number of which were joint accounts with their late mother. The claim was challenging in that it was difficult to understand from the accounts what had actually happened to the inheritance monies our client’s mother had received.

Administration of Justice Act 1985

Proceedings were issued under Section 50 of the Administration of Justice Act 1985 firstly to remove our client’s brother as the Executor. In addition, our client also sought a Declaration that the transfer of the property was to be void, or that the estate was to be reimbursed for the proceeds of sale, and an Order that the estate was to be reimbursed for the monies paid from the joint accounts to our client’s brother as a result of the undue influence exerted by the brother on their mother. Our client also sought an Order for an account of all of our client’s brother’s dealings with the estate and finally delivery up of the original Will.

Claims of Presumed Undue Influence

The claim essentially sought clarification from the court as to whether the transfer were obtained by undue influence and whether the transfers from the joint account to the brother’s sole account was obtained by undue influence.

Our client had brought her claim on the basis that the undue influence was “presumed”. The case law in respect of lifetime transactions is found in Etridge -v- RBS [2001] UKHL 44, in which it was established that if a person bringing the claim can show that there was a relationship of trust and confidence between the person alleged to have been unduly influenced and the alleged undue influencer, together with a transaction calling for an explanation, then the Claimant will have successfully discharged the burden of proof and the burden will pass to the Defendant to prove the unexplained transaction(s).

The case proceeded to trial, and in giving Judgment, the Court found that our client’s brother had a relationship of trust and confidence with his mother in respect of her financial affairs, and further, he could not provide an explanation for the lifetime transfers. The Court made an Order requiring the brother to repay those sums back to the estate.

The Court's Ruling

In respect of the transfer of the mother’s property, although the Court decided that the transfer was not brought about as a result of undue influence by the brother, the Judge stated there was no evidence to suggest that on the transfer of the property, it was to be held by the mother and brother as joint tenants. The would have meant that the mother’s share of the property would automatically pass to the brother outside of the estate.

The Court instead decided that the intention of transfer was for the property to be held as tenants in common, meaning that the mother’s 50% share of the property would pass under the terms of her Will. The brother was therefore ordered to repay 25% of the sale proceeds back into the estate, representing our client’s half share of the property, which passed to her under the terms of the Will.

The Court also ordered that the Defendant be removed as Executor and his previous solicitors would deliver up the original Will to enable our client to administer the estate. Finally, the Defendant was ordered to pay our client’s costs of the action.

“We are delighted at the result obtained for our client at the Trial of this case. When our client initially instructed us, she was unaware of her mother’s final wishes and did not understand the nature of her estate. By commencing this claim, we have been able to provide our client with the closure she sought and further obtain the inheritance she always understood she would receive.

At the start of her case, our client had received just £5,630.41 from the estate. Following the conclusion of the case, the Court has ordered that our client will receive an additional £36,795.46, which is to be repaid into the estate by her brother, plus payment of her legal costs of bringing the action”. added Laura Pracy.

How can we help

“We would urge anyone who has suspicions regarding the administration of a person’s estate and suspected undue influence in respect of transactions made during the Deceased’s lifetime to contact a Solicitor to seek advice as soon as possible,” said Laura.

For legal advice with regards to lifetime gift or lifetime transactions contact our Inheritance and Will Disputes Solicitors on 0161 785 3500 or email contentiousprobate@pearsonlegal.co.uk. 

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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.