Gifting by attorneys and deputies

Attorneys and deputies have the power to make gifts on behalf of the person for whom they act. Deciding whether to make a gift is an important part of the role. It can help to preserve the person’s relationships as well as convey their wishes and feelings. However, this power is limited. Attorneys and deputies must adhere to strict rules, and a failure to comply can have serious consequences.

The Office of the Public Guardian (the OPG) has recently produced updated guidance on gifting for attorneys and deputies, considering the legal framework from a practical perspective.

When are gifts made?

Before making a gift, attorneys and deputies should consider whether the donor of the LPA, or the person subject to the Deputyship Order, known as P for the purposes of this article, has mental capacity to make the decision themselves. Mental capacity is a spectrum, and P may have mental capacity to make some decisions but not others. A lack of mental capacity should not be assumed by reason of P’s appearance, behaviour or medical condition. An attorney or deputy should make every effort to help and support P to make the decision about gifting themselves if they are able to do so.

If P has mental capacity to make the gift, they should generally do so themselves. However, attorneys and deputies should keep a clear written record of the steps that they took to ensure that P had mental capacity to make the decision.

When making a gifting decision on P’s behalf, the main consideration is whether that specific gift is in P’s best interests. There is no single approach to gifting and each decision should be made in its own context and timing.

It is important to involve P in the gifting decision, even if they lack mental capacity to make the decision themselves. Taking into account P’s preferences can help to work out what is in P’s best interests. That said, attorneys and deputies should not blindly follow these wishes. They must always weigh up P’s wishes and feelings against all other relevant factors such as affordability and reasonableness.

A record should be kept which explains how each decision was made and the factors taken into account.

What is reasonable to gift?

Attorneys and deputies should only make gifts which are reasonable. They should exercise their own judgement as to what is reasonable in the circumstances.

To work out whether a gift is reasonable, they must consider a number of factors including:

• the impact of the gift on P’s financial situation – can P afford it?
• P’s current and future needs, for example, whether they will need to pay for care costs or care home fees.
• whether the gift is in P’s best interests.

When making a best interests decision, attorneys and deputies must consider factors such as:

• P’s previous gifting habits.
• P’s life expectancy.
• the impact the gift may have on inheritance tax payable on P’s death and on anybody who stands to inherit under P’s Will or the intestacy rules.
• the relationship between P and the recipient of the gift.
• whether there is any record of P’s wishes and feelings (such any relevant written statement made by P when they had capacity, such as in a Lasting or Enduring Power of Attorney or Will).

Attorneys and deputies are under no obligation to make a gift, and they should not allow themselves to be pressured into it. All gifts must be reasonable, affordable and in P’s best interests. Further information about best interests decision making can be found here.

What gifts can be made?

The general rule is that gifts made on behalf of P are not permitted unless approval is sought from the Court of Protection. However, there are some exceptions.

For example, for attorneys acting under a registered Lasting Power of Attorney for property and financial affairs, a gift can be made without applying to the Court of Protection if:

1. it is given on a customary occasion for making gifts within families or among friends or associates (such as birthdays, weddings and religious celebrations);
2. it is given to someone related or connected to P, or to a charity that P made or might have been expected to make gifts; and
3. the value of the gift is not unreasonable considering all the circumstances, in particular the size of P’s estate.

Deputies usually have very similar guidance.

Gifts that are authorised by the above are very limited and would only usually be very modest gifts in line with what P made in respect of customary occasions before they lost capacity, save for some very limited tax planning exceptions. Any gift which goes beyond these limited authorisations will very likely require express authority from the Court of Protection, and specific legal advice should be sought. Attorneys and deputies should not make the gift until authority is given.

The OPG can ask for an explanation of any gifts and, as such, it important to maintain a record of all gifts made.

Gift or maintenance?

A maintenance payment is not considered a gift and, therefore, does not typically fall within an attorney or deputy’s remit. The Court of Protection has confirmed that an attorney under a Lasting Power of Attorney for property and financial affairs can provide for the needs of those that P is legally obliged to maintain, for example P’s spouse, civil partner or dependent child. As with all matters, any such maintenance will need to be in P’s best interests and reasonable in the context of their wider estate.

If there is any uncertainty, attorneys and deputies should always apply to the Court of Protection. The Court cannot give any unofficial advice. This will help to ensure that the attorney or deputy does not make any unauthorised gifts or maintenance payments.

Should you wish to discuss any of the issues raised in this article, please contact Holly Mieville-Hawkins or any of the team.