Gift giving when acting under a Lasting Power of Attorney
When you have been appointed as an Attorney or Deputy for a family member or friend who has lost mental capacity (“the Donor”) you will have to make a number of decisions in relation to their property and finances including decisions about making gifts on their behalf.
What is a gift?
A gift is a transfer from the Donor to another person which will reduce the value of the Donor’s estate. It could be a monetary gift to an individual or charity, allowing someone to live in the Donor’s property rent-free or making an interest-free loan from the Donor’s money (the ‘lost’ interest would be classified as a gift).
Who can I give a gift to?
Unless it is specifically mentioned in the LPA or Deputyship Order, the only categories of people you can make gifts to on the Donor’s behalf are:-
Family members, friends or acquaintances of the Donor; or
When can I give a gift?
Gifts can be made on “customary occasions” such as a birth, a birthday, a wedding or civil partnership or anniversary or on “seasonal occasions” where gift giving is typical, for example Christmas, Diwali, Eid, Hanukkah or Chinese New Year.
You can also make gifts to charities which the Donor previously supported or might be expected to support.
How much can I gift?
It is important that gifts made on behalf of the Donor are not excessive and that due consideration is given to the effect of the gift on the Donor’s assets. Gifts must always be well within what the person can comfortably afford. ‘Affordable’ varies a lot from person to person. A £250 gift has a bigger impact on someone with £10,000 than someone with £100,000.
What if I want to make a large gift or a gift that is not considered customary or seasonal?
In this situation, you will need to consider making an application to the Court of Protection to obtain permission. You must consider whether the proposed gift is reasonable and should ask yourself the following questions:-
Is the gift in the best interests of the Donor?
Did the Donor used to give gifts of this value when they had mental capacity?
Would the gift affect the Donor’s ability to meet their living expenses now or in the future?
What is the Donor’s life expectancy – will they have enough money to last them the rest of their life?
Does the gift reflect the Donor’s Will? Are you treating family members equally?
Would the gift be seen as a “Deprivation of Assets”? You cannot give away the Donor’s property as gifts or spend their money on gifts to attempt to avoid care home costs.
What happens if I give a gift beyond my authority?
In this situation, the Office of the Public Guardian might
Launch an investigation
Give you a warning
Ask you to pay back the money or return gifts
Tell you to apply for retrospective approval from the Court of Protection
In serious cases you could be removed from acting as an Attorney or Deputy
Alert the police or other authorities – it could be seen as fraud and prosecuted criminally
It is important to remember that whilst you are acting in place of the Donor you cannot treat their money as if it were your own. There are strict rules governing Attorneys and how they may use the Donor’s money. Remember – if you make a gift on a Donor’s behalf that isn’t of reasonable value, you could be breaking the law.
Laura Brown, Paralegal, Probate and Wills
Lawson West Solicitors, Market Harborough
If you are an Attorney and have any queries regarding your role, please do not hesitate to contact one of our specialist lawyers who will be able to offer you guidance and advice. Contact Us here.View all