Can a gift of money or assets made before death be challenged by other family members?

A gift made during a person’s lifetime — known in law as an inter vivos gift (“between the living”) — is one of the most fundamental exercises of property ownership. The general rule is clear: a mentally capable adult can give away their money, property, or other assets to whomever they choose, and those gifts are final. They cannot ordinarily be reclaimed by disappointed relatives after the donor’s death.

But there are exceptions, and understanding them is important — particularly when significant assets are involved.

The General Rule: Gifts by a Competent Adult Are Final

If a person has legal capacity and makes a gift freely, without any coercion or undue pressure, that gift is valid and irrevocable. Once an asset has been lawfully transferred, it belongs to the recipient. Other family members — including children who might expect to inherit — have no automatic right to challenge or reclaim it.

This principle reflects the common law’s strong protection of individual autonomy: you have the right to do what you wish with your own property during your lifetime, regardless of what others think is fair.

When Can an Inter Vivos Gift Be Challenged?

There are three main circumstances in which a lifetime gift may be vulnerable to legal challenge:

1. Undue Influence

Equity will set aside a gift if the donor’s free will was overborne by another person in a position of trust or power. The High Court confirmed this principle in Bridgewater v Leahy (1998) 194 CLR 457,¹ where a substantial property transfer by an elderly farmer to a family member was set aside because the donor was under a special disadvantage and the recipient unconscionably took advantage of that position.

The typical pattern that attracts scrutiny is a vulnerable, elderly, or ill person who lives under the control of a sole carer, and makes a very large gift to that carer — particularly one that significantly disadvantages other family members.

2. Lack of Capacity

A gift made by a person who did not have the mental capacity to understand what they were doing may be void or voidable. The capacity test for a lifetime gift is similar to, but arguably lower than, the testamentary capacity test: the donor must understand the nature of the gift, the extent of the property being given, and to whom it is being given. A person with advanced dementia, for example, may lack this capacity.

3. Fraud or Misrepresentation

If a gift was procured through fraud — for example, the recipient deceived the donor about what they were signing — equity may set it aside.

The Queensland Position: No Notional Estate Clawback

One important distinction between Queensland and New South Wales concerns family provision claims.

In New South Wales, the Succession Act 2006 (NSW) contains notional estate provisions² which allow a court to “claw back” assets that the deceased disposed of before death — including inter vivos gifts — and treat them as part of the estate for the purpose of making a family provision order. This means that in NSW, even a gift made years before death can potentially be brought back into the estate to satisfy the claims of a dependent child or spouse.

Queensland’s Succession Act 1981 (Qld) does not contain equivalent notional estate provisions.³ In Queensland, a family provision claim is generally limited to assets that form part of the deceased’s estate at the date of death. Assets that were lawfully given away before death are not ordinarily available to satisfy a family provision claim.

This is a significant difference. A Queensland resident who wishes to give assets to specific children during their lifetime, without those gifts being vulnerable to family provision claims later, may have a stronger position than a NSW resident doing the same thing.

The Importance of Documentation

While the law generally protects lifetime gifts by capable adults, disputes still arise — particularly where:

• The gift was very large (a house, a business, a significant sum of money)
• The donor died shortly after making the gift
• Other family members were not aware of the gift at the time
• The donor had any history of cognitive decline

To protect against future challenges, significant gifts should be accompanied by:

1. A deed of gift — a simple written document recording what was given, to whom, when, and for what consideration (if any). A solicitor can prepare this quickly and inexpensively.
2. A written record of the donor’s reasons — why they chose to make the gift, and why to this particular person or persons. This is particularly important where the gift favours one child over others.
3. A contemporaneous capacity assessment if there is any risk of later challenge — particularly where the donor is elderly or has any history of cognitive impairment.
4. Independent legal advice for the donor — having the donor see a solicitor independently (not one acting for the recipient) provides strong evidence that the gift was made freely and with full understanding.

Related Topics

• Who can challenge a Will in Queensland?
• What is undue influence and can it invalidate a Will?
• Can I challenge a Will signed by someone with dementia?
• Family Provision Claims in Queensland
• Legal Matters Ep 17: AI Law & Estate Questions

Professional Guidance

The Wills and Estates team at Bell & Senior Lawyers can advise on estate planning strategies, including how to structure lifetime gifts to protect your intentions and minimise the risk of future disputes.

📞 (07) 5532 8777 | 🌐 bellsenior.com.au | Contact us

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