A London judge has allowed a son to make a £6 million ‘gift’ of his 72-year-old mother’s £18.6 million estate in order to cut inheritance task.
The 72-year-old woman, who cannot be named, suffered from dementia and needed full-time care. Subsequently, the woman made her only surviving son her lasting power of attorney in 2012 and she had appointed her son as her only attorney 8 years ago; highlighting the intense trust she had in her only living relative.
During the Court of Protection case, the man asked Judge Hilder to allow him to ‘gift’ himself £6 million in order to reduce inheritance tax liabilities.
Judge Hilder supported the claim because other trusted experts, working in the interests of the woman, were also in agreement.
Most notably, the staff from the office of the Official Solicitor, that were representing the woman separately, and work with mentally ill people going through litigation. Their support highlighted the honesty and legitimacy of the claim.
Additionally, the woman’s long-standing financial advisor was ‘fully in support,’ suggesting that the claim was not exploiting the mental incapacity of the woman.
Historically, there was also a clear pattern of ‘gifts’ being offered to the son. Eight years earlier, the woman had gifted him £500,000 towards a property purchase.
Among the £6 million ‘gift’, the Judge also approved gifts to charity that amount to around £7 million. Donations that could reduce inheritance tax by more than £3million.
Judge Hilder said: “(The woman’s) sole-surviving child makes the application.
“Of course it may be said that, since he is the recipient of the largest part of the proposed gifting, the application is self-serving but I am satisfied that it has not been improperly brought.
“(The woman) appointed (her son) as her sole attorney, indicating a significant degree of trust and faith in him and the decisions he is thereby empowered to make.
“The proposal he now makes is beyond the scope of his powers as attorney but he makes it with (the woman’s) long-standing adviser, fully in support.
‘”factors in favour’ of the ‘proposed gifts’ outweighed ‘factors against’.”
The fact that clear estate planning and the LPA’s role was clearly defined before the woman was incapacitated highlights the agreement of future decisions that were made on her behalf.
Despite the son clearly benefiting, her wishes that her sole heir inherits the majority of her estate are being upheld by the judge.
Does this case highlight the intrinsic benefits that can be gained from detailed estate planning? Should more be done to ensure that inheritance tax is fair for everybody? Does this open the door for more people to make similar claims?
