Validity of a gift - typed and signed, enough to prove ownership?

Gold_Shogun

 
@Sea_Shell
In respect of ::-
"Would you agree that the best course of action, for anyone gifting an item, is to actually hand it over there and then? "
I most certainly would agree in most circumstances, BUT sometimes (especially for smallish not-highly-valuable personal chattels as I stated) it is more effective for Family harmony, happiness, & certainty to do it using the dual- method I suggested, especially where the possibility of family vultures may arise.  ... That has NOTHING to do with "Inheritance Tax Evasion" as some have tried to suggest.


@Keep_pedalling
In respect of ::-
"The simplest solution is for the OPs father to actually hand the “gifts” over, or if they really can’t bare to not have the pictures on the wall gift cash instead. Cash does not have any sentimental value and would actually fall out of his estate after 7 years so has the potential to actually reduce a future IHT bill.."
The OP made it ckear in his posts PRIOR to my first post that their Primary concern was the sentimental attachment to the actual pictures rather than the "Cash value" thereof ..AND.. that she was willing to pay any Inheritance Taxes that MAY become due upon FILs death.


@Malthusian
In respect of ::-
Much of your larger/earlier post .....
It unfortunately seems clear that you either never properly read & understood my post that you  quoted from, OR you chose to ignore what I had said ... For example, you quoted my statement that "I wouldn't recommend trying to "twist" the base principles into trying to create a "Tax Evasion Scheme" for heritable property or known highly valuble investment-type items (== Banksy-Artwork / Faberge eggs / the Family Home / etc / etc)." ... BUT you then made up a ficticious directly-conflicting argument about a parent "giving a HOUSE (== heritable property) away and then living in it rent-free for the rest of his life" ... Which has NOTHING to do with the Paintings (== Moveable Personal Chattels) post that the OP was enquiring about and that I had responded to.
ALSO ... In your final paragraph you made unwarranted assumptions or allegatations that the separate Deed of Gifts & Loan Agreements I had arranged & quoted were supposedly for the purpose of "getting away with underpaying IHT" when I had said NO SUCH THING ... In Reality, BOTH of those arrangements were made for estates that were well below the IHT thresholds, and were actually made for thwarting Family Vultures who wanted to deny the distribution of Elderly Parent's personal trinkets amongst their other siblings, kids, & grandkids as the parents wished .... They had NOTHING to do with "IHT Evasion" as you suggest, so kindly STOP making & stating False Assumptions and Allegations like that until and/or unless you know the Actual Facts.
As I also clearly said in my post (which you didn't quote) ... .... The Devil is always in the Detail and the individual circumstances.


@Manxman_in_exile
In respect of ::-
All of your post .....
Thank you kindly, as you appear to read & understood the OP's Posts, Enquiries, & Goals almost exactly the same way I did ... which is the path I took in answering his posts the best way I could tn THOSE circumstances.

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My apologies for this post length, but it was easier to respond to multiple related-posts & posters in a single combined-post rather than in multiple separate posts.

Sea_Shell

Gold_Shogun said:

 
@Sea_Shell
In respect of ::-
"Would you agree that the best course of action, for anyone gifting an item, is to actually hand it over there and then? "
I most certainly would agree in most circumstances, BUT sometimes (especially for smallish not-highly-valuable personal chattels as I stated) it is more effective for Family harmony, happiness, & certainty to do it using the dual- method I suggested, especially where the possibility of family vultures may arise.  ... That has NOTHING to do with "Inheritance Tax Evasion" as some have tried to suggest.

@Gold_Shogun

Would you also agree though, that if any "family vultures" do decide to swoop in and claim/remove any items detailed in such "duel documents", then the documents are only as good as the enforcement through the courts that the aggrieved party is prepared to take?

Malthusian

It unfortunately seems clear that you either never properly read & understood my post that you  quoted from, OR you chose to ignore what I had said ...

The only part of your post that I took issue with was your claim that making a formal loan agreement to borrow back the paintings for the donor's lifetime "avoids any later "Gift With Reservation" claims", which it does not. You later doubled down on this claim saying such a loan "avoids and/or greatly reduces the likelihood of "Gift With Reservation" scenarios as the Donor completely relinquishes all control and ownership rights of the (personal chattel) items as in this case for the paintings" and that the loan document helps prove the start date for the 7 year PET clock (which in reality never starts ticking for a Gift With Reservation).

If you don't understand the implications of your own statements there's not a lot I can do about that, but they still needed to be challenged.

In Reality, BOTH of those arrangements were made for estates that were well below the IHT thresholds

So in support of your (incorrect) claim that making a formal loan agreement avoids a painting hanging on your wall being treated as a gift with reservation of benefit and added back into the estate, you cited your anecdotal experience that two estates weren't investigated by HMRC for doing this... because they were underneath the nil rate bands and not liable for IHT in the first place?

I think we can probably wrap this up here.

The OP has stated that their FIL made their gift with reservation of benefit with "the idea that he would live 7+ years and then there would be no taxes payable on such a gift" so we can assume that his estate is over the threshold.

It would not be unusual for someone to be mistaken about being liable for IHT, and to come up with a hare-brained wheeze to avoid IHT that they aren't even liable for, but we have to take the information presented at face value.

Gold_Shogun

@Malthusian

In respect of::-
"The OP has stated that their FIL ORIGINALLY made their gift with NO reservations of benefit with "the idea that he would live 7+ years and then there would be no taxes payable on such a gift" so we can assume that his estate is over the threshold."
 
I've corrected your above statement with the (in BOLD CAPS above) actual statements made by the OP in his original post (SEE Post #1) ...
..... What you misleadingly left out was his later statements that they realised they were mistaken about POSSIBLE future tax exemption AND that his post & query was (irrespective of any possible later tax-position) about of the Personal & Family effects & Validity of the seemingly poor "Deed of Gift" document drawn up by the FIL's accountant (SEE Thread-Title == Namely == "Validity of a gift - typed and signed, enough to prove ownership?" )

... Furthermore, Nobody here knows the Commercial Value of those paintings, which could be anything from Ten Pounds -to- Ten Million Pounds. Likewise Nobody here (including the OP) can possibly know IF the (still presently living) FIL's Estate with OR without the paintings is or would be actually definitely over OR under the IHT Limits either now OR when he eventually dies in the future. .
.... The ONLY thing we know for a fact is that the Paintings are seemingly Emotionally & Metaphorically "Priceless" to the OP's partner and perhaps to her Dad.

Consequently, Nobody can assume (as you claim above) "that his Estate is over the threshold", so your assumptions & musings on POSSIBLE (but unknown) future IHT Liability are totally irrelevant and meaningless to the OP's "Here and Now" Family-Ownership queries. .
.. ..... Although I accept they MIGHT become relevant in the future IF (a) tha paintings have substantial commercial value AND (b) IFthe OP or family then tried to use the Deed of Gift & Loan Agreement to try to evade any IHT liability that MAY arise at that time IF the paintings are still in possesion of the FIL upon death.. (which is a fair few "IFs")

It is clear that you & I are not going to agree viewpoints over the OP's queries, and I don't wish to get into any pedantic arguments with anybody over this, so let's just agree to disagree and you follow your path whilst I follow the path that has served my family & friends & I very well over the past 40 years or so.

Cheers & Long Life
Bob

Gold_Shogun

@Sea_Shell

In respect of ::
"Would you also agree though, that if any "family vultures" do decide to swoop in and claim/remove any items detailed in such "duel documents", then the documents are only as good as the enforcement through the courts that the aggrieved party is prepared to take?"

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That's a fairly meaningless question, as exactly the same can be said about ANY Deed, Agreement, or Contract !! ... Irrespective of whether it's between the Lowliest-Peasants AND/OR the Biggest-Corporations AND/OR National Governments.

IF ANY one party is not prepared to protect or enforce their Legal Rights, then doing anything but unprovable (& consequently unenforcable) verbal-agreements would be pointless, and all the civil lawyers would be out of business.

Now kindly let me ask you a query in a similar vein (namely, the OP's summarised position) if you don't mind .....

Imagine yourself in the same position as the OP's partner & her sister, where your Dad wants to unconditionally gift you some family-heirloom type paintings out of Love or for Personal or Emotional reasons and where you accept that it may possibly attract some future-tax depending on circumstances at THAT time
... Now fast-forward 5, 19, or 15 years and (irrespective of whether or not those paintings were still in your Dad's home at that time) your Dad has (for examples) Remarried OR gone into a care-home OR has just died, and one or more P.O.A. or Family Vultures then decides to crawl out of the woodwork and claims either that the paintings were either given to them OR were never given away by your Dad at all.
... You therefore either need to act to protect your Rights & Gift OR just "slink away".

Which of these would you rather have to support your position & disprove the Vulture :-
[A] ... A verbal & unprovable "He said, I said" argument, which gives you a 50-50 chance of success at best.
OR
[B] ... A properly executed & independany witnessed Deed Of Gift signed contemperaneously by your Dad and (IF needed) a Loan Agreement explaining that you had Voluntarily chosen out of Love to allow the paintings to temporarily remain at his house UNTIL (1) you chose to take them at ANY time as was your Legal Right, OR (2) your Dad went into a Care Home, OR (3) your Dad died.
OR
[C) ... Just slink away with your tail between your legs and give up all your Rights to the Vulture(s).

I'm pretty sure your answer would probably be [B], especially bearing in mind that in that situation, MOST Vultures would be much less willing to fight or fund a Legal-Beagle dispute or Court case that they are likely to lose at substantial cost to themselves. .
.... In my experience over the past 40(ish) years of doing these sort of agreements, where I've drafted the documents for the Recipient, every single Vulture has "folded" long before it came to any Court case, and I know of a few Vultures that incurred some pretty eye-watering legal costs on their side for trying & failing, relative to the commercial value of the disputed tems.

In my experience many Gift-Vulturisms arise out of family pettiness, hate, and/or vindictiveness .... but it is also often a truism that "Where there's a Will & even more so where there isn't, there's a Fight" (which is another subject entirely and not relevent  [at least yet] to the OP's original queries)

Sea_Shell

Sorry, but I don't see it as a meaningless question.    Just that one should know what the limitations of such documents are, before entering into a "contract".

"B" may well be "best", but before drawing up "B", one must look oneself in the mirror and ask oneself how far you'd be prepared to take matters if push came to shove.

It would be nice if the world was so black and white, right and wrong.     An agreement is better than no agreement, but it is NOT a magic bullet to prevent wrongdoing.

Many times we read on here where people have a very real LEGAL right to something....but they can't afford or bear to put themselves or their family through the financial and emotional ordeal of pursuing their right!!     Whether that's an inheritance, or a (documented) loan to family or friends.

Cost of recovery HAS to be weighed up against value (financial and sentimental) of the goods/items/money at stake.   

Hang around these boards for long enough, and you'll read plenty!!    Even with "B" in place, sadly, it ends up with "C" being the outcome.

Disjoint

Thank you all for the time you've put in replying to this thread!
After reading all the comments, this got me extremely worried, so I shared this post with my wife.

She has discussed the matter with her father as I told her the risk is too high and the potential heartache too big. Her father has given her the majority of the paintings physically so as to avoid this issue and are now with us. He has kept a few paintings for himself, and is more than happy to sign any documents to make sure she gets them, as long as he gets to enjoy them for the rest of his life.
To clarify a few points: estate is above the IHT threshold. The paintings that are left in his possession are anywhere between £5k to £30k (huge assumption, I have no idea). I was under the wrong impression that we would avoid IHT if we simply signed a gift (my naivety entirely). The paintings that are left in his possession, my wife has re-iterated to me that it's not about the money and she will happily pay for IHT as long as she keeps them.

I will take @Gold_Shogun 's advice to have an agreement in place with defined pics and descriptions of the paintings. While clearly not ignoring your advice @Sea_Shell as it is very likely that we would not have the energy to go to court to reclaim those paintings in the event that the partner wants to fight for them. 

Based on all your advice:
1) we took most of the paintings that were gifted
2) we will record and draft every paintings that are still in my my FIL's possession
3) I actually contacted a solicitor to confirm this, an agreement is just that - to be enforced it would potentially have to go to court and the paintings that are left are not worth fighting for.
4) IHT is not the main concern, and not a concern at all for my wife (I initially thought I was a clever boy by having my FIL sign the paintings off still in his possession... How wrong was I...)

Gold_Shogun

@Disjoint

Glad to be of service .... PM sent, and both Documents sent separately via Email earlier today as promised.

Keep_pedalling

Why does he simply not put those paintings still on his walls in his will? 

Disjoint

Keep_pedalling said:

Why does he simply not put those paintings still on his walls in his will? 

Wills can be changed, especially in old age as people can take advantage of diminished mental capabilities (good luck proving that in court). Paintings can be "lost". I have learned that Wills can be absolutely worthless.