It is normal for money, often considerable sums, to pass between family members. However, when this is done without legal advice, it is only too common for disputes to arise as to whether or not the sums concerned were meant as gifts. Disputes between family members often become particularly fractious. Exactly that happened in one case in which a mother and son ended up at loggerheads over ownership of properties worth £800,000.
The case concerned a flat and a house which were both held in the son's sole name. A family row erupted some years after the properties were acquired, and his mother claimed that she had paid the whole of the flat's purchase price and made a significant contribution to buying the house. She launched proceedings, asserting that she was the beneficial owner of the flat and a proportion of the house equal to her contribution, and that both were held by her son on trust for her benefit.
In ruling on the dispute, the High Court noted that the son was a successful businessman and would well have been able to afford to purchase the flat for £56,000 without his mother's help. Although she had made payments to him exceeding £60,000 in the years before the purchase, the Court found that they were gifts and there had been no intention that she would thereby obtain equity in the property. Her belief that she had made payments to her son specifically to enable the flat's purchase was erroneous.
The house had been bought for £375,000 and there was no dispute that the mother had paid her son £111,000 prior to its acquisition. The Court found that, in that instance, the payment had not been intended as a gift and it entitled the mother to a one-third beneficial interest in the property.
The courts are not the place to sort out issues like this: simple documentation completed at the time of the transactions would have prevented any misunderstanding and an expensive legal battle.