Making gifts as an attorney or deputy
Attorneys appointed under a power of attorney must ensure they don’t infringe the rules on gifting on behalf of the person whose finances they look after. This applies whether it’s a registered lasting power of attorney (LPA) for property and affairs, or an enduring power of attorney (EPA).
Deputies appointed by the Court of Protection (the Court) must also ensure they don’t infringe these rules. The person whose finances are managed is called the donor in powers of attorney cases, or P in a deputyship.
First and foremost, the donor/P must decide to give the gift. If they can’t make or be helped to make the decision, then the attorney or deputy can make decisions if they believe it’s in the best interests of the donor/P.
They’ll need to consider the person’s wishes, what family members think they may have wanted, and whether they may regain capacity again to decide for themselves and their current needs.
What is a gift?
A gift is the transfer of money, property or possessions from one person to another without payment, and includes using the donor/P’s assets to:
• Make charitable donations
• Pay school/university fees
• Sell property at a reduced rate, or allow someone to live in it rent free
• Create a trust or make an interest free loan
• Pay for care from a family member (unless expressly agreed in an LPA), and execute a deed of variation to redirect the donor/P’s share in an estate
All these gifts require Court approval.
What gifts can be made?
Deputies and attorneys must follow rules about intentionally reducing assets. This is known as deliberate deprivation of assets which means they should not give away assets that might be needed to fund care. If a deprivation occurs, local authorities can include those assets in any financial assessment.
Attorneys
Attorneys must comply with any express restrictions in the document. For LPAs, attorneys can make gifts which are reasonable given the circumstances and size of the donor’s estate, on customary occasions (e.g. birthdays, weddings, civil partnerships), to persons (including the attorney) who are related to or connected to the donor, or to any charity to whom the donor supported or might have supported.
The law does not define what is reasonable, but the attorney must consider the impact of the gift on the financial position of the donor, and whether it would be in their best interests. This requires consideration of previous gifting history, life expectancy, financial demands and affordability, testamentary wishes and the impact on those inheriting from their estate.
With an EPA, the law is similar, but slightly narrower in what is allowed.
Deputies
The rules are broadly similar, but the order itself will set out the extent of the authority to make gifts. Court approval must be sought for anything exceeding this, or if there’s no permission.
De minimis exceptions
Some gifts may be ‘de minimis’, meaning they’re beyond the authority of the attorney/deputy but don’t justify an application to the court.
This applies where the donor/P has an estate worth more than the inheritance tax (IHT) nil rate band (currently £325,000), has a life expectancy of less than 5 years, the gifts are affordable taking into account care costs and standard of living, and there is no evidence that the donor/P would have objected.
This allows them to use the annual exemption for IHT of £3,000, and further gifts of £250 for up to ten people.
Consequences of unauthorised gifts
The Office of the Public Guardian (the OPG) can investigate gifts made by attorneys/deputies, and there can be consequences for over-stepping powers. The OPG could apply to the court to have the gifts repaid and a deputy/attorney suspended temporarily or permanently. In the most serious cases, if there is fraud, the OPG could ask the police to investigate.
Where the attorney/deputy is unsure about a future or past gift, they should seek specialist legal advice which may require an application to the court for approval or retrospective permission.
If you’re interested in learning more about gifting, speak with a local Lifetime Lawyer near you: https://www.lifetimelawyers.org.uk/Public/Radius-Search/Find-a-Solicitor.aspx