The transfer of all or part of an interest in a property is a hugely important issue as for many older people. This is because for many, their home is their most significant asset. A number of questions arise;

• When is ‘protecting’ an asset for someone financial abuse?
• What can you do about a suspect transaction during the lifetime of the giver?
• Can you do anything about the ‘gift’ after the giver has died?

There may be apparent consent by the property owner, for example signed documents, but they may not be what they seem as coercion or undue influence might have been involved.

There can be a misapprehension that if a victim of financial abuse has mental capacity that “it’s their choice” and nothing can be done.

What is Property Ownership?

In England and Wales, property is owned both legally and beneficially.

You can be the legal owner of a property, i.e. registered with the Land Registry, and also be entitled to the proceeds of sale of that property. You are the legal and beneficial owner of the property.

Or – you may be the legal owner of the property but not entitled to the proceeds of sale if it is sold. In that case, you are holding a property ‘on trust’ for someone else.

Or, you can have a beneficial interest in a property but not be the legal owner. This means that you are entitled to some or all of the proceeds of sale, but your name is not registered as the legal owner anywhere.

Avoiding care home fees

It’s entirely understandable that anyone who is considering the possibility of having to go into care, doesn’t want to have to sell their home to pay for it. Sadly, it means that many people ill-advisedly transfer their homes to a family member,  or put it into a trust when it may not even be necessary; https://www.ridleyhall.co.uk/do-you-have-to-pay-for-care-home-fees/.

The plan can backfire for all sorts of reasons and legal advice should always be taken before transferring a property to avid care home fees.

Undue Influence

The legal argument of “undue influence” can be used to set aside lifetime gifts of property, either during the lifetime of the giver, or after their death.

A finding of undue influence does not depend on proving that the victim made no decision of his or her own – or that their will and intention was completely overborne. The leading case in this area of law, Royal Bank of Scotland Plc v Etridge (No 2) in 2001 makes it clear that it’s necessary for the court to investigate how the intention to enter into the transaction came about.

Someone may understand fully the implications of a proposed transaction – but still be acting under the undue influence of another.  Obtaining advice from a solicitor does not necessarily prove that the transaction was free from the exercise of undue influence.

Also, it’s not necessary to prove deliberate wrongdoing on the part of the person receiving the gift.

I am increasingly seeing cases involving presumed undue influence; where the issue is generally a matter of what has not been done, e.g. ensuring that independent advice is available to the giver.  The elderly, especially those who are physically dependent on relatives, friends or professionals are likely to be in relationships that may give rise to a presumption of undue influence.

The categories of relationship where undue influence can be presumed include:

• Doctor – patient,
• Parent – child,
• Trustee – beneficiary and
• Solicitor – client.

It cannot be presumed in relationship between a husband and wife, or civil partners.

The ‘recipe’ for presumed undue influence is:-

1. That the victim placed trust and confidence in the other party, or that the other party acquired ‘ascendancy’ over the complainant. In the case of certain categories of relationship this ingredient may itself be presumed (see above) and
2. The transaction is not readily explicable by the relationship between the parties and calls for an explanation.

If those two ingredients are proved, then the defendant must argue against (or rebut) the presumption of undue influence.

For a court to decide whether a transaction ‘calls for an explanation’, the context of the gift must be considered and its general nature; if there’s a satisfactory explanation then the presumption of undue influence will not arise.  The court will take into account:

1. the nature and size of the gift or transaction, including its proportionality in relation to the giver’s assets and
2. the extent to which the victim’s future needs are capable of being met out of his or her remaining assets. If the gift is out of all proportion to any kindness or services in question, the court will be suspicious.

Summary

When someone transfers their main capital asset, or a significant proportion of it, to someone else it’s possible that the transaction can be set aside  – every case is different and the Court will look at all the relevant circumstances before making a decision. It’s really important that the relevant evidence (such as emails, letters, documents and witness statements) are obtained and carefully assessed as soon as possible.

If you require legal help or advice, you can speak to Sarah on our freephone 0800 8 60 62 65.

Sarah Young Director – Litigation