Making gifts as an attorney or deputy

Attorneys and Deputies have significant power to deal with the Donor’s finances.

They can make gifts on behalf of the Donor provided there are no restrictions contained within the LPA or Deputyship Order to that stop them from doing this. However, gifts can only be made to people who are related to or connected with the Donor on customary occasions such as birthdays, wedding or civil partnership anniversaries, or any other occasion such as Christmas or Diwali when they would have usually given gifts to family or friends. The Court of Protection suggests appropriate amounts are the one-off £3,000 annual gift and the £250 small gift per person, as specified in the inheritance tax legislation.

The value of any gift must be reasonable compared to everything that the Donor owns (the Donor’s estate). The reasonableness of a gift must be considered and the first and paramount consideration must be whether the gift is in the Donor’s best interests as well as:

1. The Donor’s habits of giving when they retained capacity. What would the Donor have given if they had capacity?
2. The Donor’s life expectancy – for a large gift, it should be more than 5 years.
3. The projected cost of any future residential or nursing care for the Donor. The gift needs to be affordable, without depriving the Donor.
4. The terms of the Donor’s Will, so items are not given away to the wrong beneficiaries and legacies can be given the full effect.
5. The impact of inheritance tax on the Donor’s death. Does the value of the Donor’s assets exceed the inheritance tax nil rate band of £325,000 or not?

To make larger gifts, say for inheritance tax planning purposes or gifts that are not considered customary, you will need to make an application to the Court of Protection. Details of how to apply to the Court of Protection are available from the Office of the Public Guardian and we can advise and assist you with such an application.

Additionally, if the Donor used to regularly give to a charity, the attorney/deputy may continue to do this on behalf of the Donor. Again, the value of any donation to a charity must be reasonable compared to everything that the Donor owns.

An application to give permission for the gift must be made to the Court of Protection under s23 of the Mental Capacity Act 2005 in any of the following cases :

1. Gifts that exceed the limited scope of authority conferred on attorneys/deputies that is, on customary occasions.
2. Loans to the attorney or to members of the attorney’s family
3. Any investment in the attorney’s own business
4. Sales or purchases at an undervalue
5. Any other transactions in which there is a conflict between the interests of the Donor and the interests of the attorney

Attorneys and Deputies should be aware of the law regarding their role and responsibilities. Ignorance is no excuse. At least, attorneys should be aware of the “Information you must Read” on the LPA form and ideally, deputies and attorneys need to be familiar with the requirements of Code of Practice set out in the Mental Capacity Act 2005. In several recent cases, the Court of Protection has ordered attorneys to repay money to the Donor, as a personal liability when they have acted beyond their powers in making disproportionately large gifts to themselves, their family members and charities previously supported by the Donor, without the permission of the Court.

If you have any queries about your role as an attorney/deputy, please speak to us, especially if you are considering making large gifts or donations from the Donor’s money. Better to be safe after sound legal advice, than sorry!

Our experienced private client team would be delighted to assist you. Please call either Mrs Outi Hubbard, Sarah Ellis on 020 8735 9770.