Tax and estate planningWills, trusts and probate

Making Gifts as an Attorney or Deputy – What You Can and Can’t Do

Most of us are familiar with the concept of using Lasting Powers of Attorney (LPAs) or Deputy Orders to help deal with the affairs of a person who lacks the mental capacity or who may be worried they will lose this capacity as they get older. Primarily they exist to help make decisions about a person’s property and financial affairs or their health and welfare when they are not in a position to do so. Not so widely understood are the rules surrounding the giving of gifts through LPAs or Deputy Orders.

Deciding whether to give a gift is a key part of the responsibility of being a deputy or an attorney. Amongst other things, gifts help to preserve the relationships with family and friends of the person whose finances you are helping to look after (the donor). Gifting can make sure the donor’s loved ones are treated consistently and in the way that they would wish despite their incapacity.

There are strict limits imposed on attorneys and deputies relating to the gifts they are and are not allowed to make. It’s a common misconception that attorneys and deputies are able to continue to make gifts on behalf of the donor provided the donor was making gifts of that nature before they lost capacity. The reality is not quite as simple as that…

What Counts as a Gift?

It helps, to start with, to look at what counts as a gift. When we think of a ‘gift’, we often think of this in the simplest sense: the giving of money to family and friends.

A gift could, however, be the payment of a grandchild’s school fees. Or it could mean allowing someone to live in the donor’s property rent-free or at a discounted rate, or selling the donor’s home to a relative for less than the market value. It’s important to be aware of the breadth of this definition.

When Can Gifts be Made?

Gifts can only be made at certain times and in certain circumstances. Unless the LPA or deputyship order states otherwise, attorneys and deputies can only make gifts according to the following criteria:

  • They can only be made on customary occasions (such as birthdays, Christmas, marriages, etc.)
  • They must be to someone related to or connected to the donor, or to a charity the donor has previously supported
  • They must be of a ‘reasonable’ value (particularly taking into account the size of the donor’s estate)

If an attorney or deputy wants to make a gift on behalf of a donor that doesn’t sit within the above rules, they will need to apply to the Court of Protection to be allowed to do so.

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What Sort of Gifts Need Court of Protection Authority?

An application to the Court of Protection might be needed if the attorney or deputy would like to make a gift from the donor’s assets that they believe is in the donor’s best interests, but which doesn’t fit with any of the above criteria.

The starting point in any application is affordability: can the donor afford to make gifts from his or her estate or is it likely they will require access to those funds in the future? If the donor can afford it, then the next consideration is whether making those gifts would actually be in the donor’s best interests.

This is what the Court of Protection will decide. They will consider factors like:

  • The donor’s past and present wishes and feelings (e.g. the extent to which the donor was in the habit of making gifts prior to their loss of capacity)
  • The beliefs and values that would be likely to influence the donor’s decision if they had capacity
  • The other factors the donor would consider if he or she were able to do so (e.g. whether there are any inheritance tax advantages to making the proposed gifts)

In summary, there’s plenty for attorneys and deputies to be aware of in these situations but these rules play an important role in ensuring the best interests of the donor are looked after.

If you have any queries about whether you are authorised to make certain gifts, or if you would like assistance in applying to the Court of Protection to make gifts on behalf of someone who lacks capacity, please get in touch. A member of the Progeny Private Law team would be happy to provide you with more information.

The content of this article is for information only and is not intended to be construed as legal advice and should not be treated as a substitute for specific advice. Progeny Private Law Ltd accepts no responsibility for the content of any third-party website to which this article refers.

Georgia Samardzija

Chartered Legal Executive, Private Law

Georgia began her career in 2013 working for Martin Hasyn and Frances Davies, now Directors of Progeny, and joined Progeny when it was founded in 2015.

Learn more about Georgia Samardzija

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