Written by Lavanya Hart, Associate Solicitor
If you are appointed as an Attorney or Deputy, you have a duty to look after the best interests of the person you are making decisions for. If you are looking to make seasonal gifts, even with the best intentions, there are strict rules that Attorneys and Deputies must be aware of.
Lavanya Hart, a member of our Elderly and Vulnerable Client Team, explains the dos and don’ts of gift giving as an Attorney or Deputy.
Key Takeaways
- Attorneys and Deputies have specific powers when making gifts on behalf of someone else, with rules around what is and isn’t permitted.
- Gifts must be reasonable, affordable, and in the best interests of the person they represent, with some gifts requiring Court of Protection approval.
- Howell Jones’ Elderly and Vulnerable Client Team can provide expert advice on gifting rules, Lasting Powers of Attorney, and Deputyship matters.
What Are Attorneys and Deputies?
Attorneys are those who are appointed by someone under a Lasting Power of Attorney (LPA) or Enduring Power of Attorney (EPA) to make decisions on their behalf.
A power of attorney is a legal document which allows someone you trust (family member or a close friend) to act for you if you are no longer able to make decisions by yourself. Providing you have the mental capacity to make an LPA, you can decide who to appoint as your Attorneys.
Deputies are those appointed by the Court of Protection for people who lack mental capacity to make a Lasting Power of Attorney.
Can Attorneys and Deputies Make Gifts on Behalf of Someone Else?
Attorneys must ensure they comply with 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 must also ensure they comply with these rules. The person whose finances are managed is called the donor in powers of attorney cases, or P in a deputyship.
The donor/P must decide to give the gift in the first instance. If they cannot make or be helped to make the decision, then the attorney or deputy can make decisions if they believe it is in the best interests of the donor/P.
The attorney or deputy will need to consider the donor/P’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 can include making charitable donations on the person’s behalf or on customary occasions, gifts to people connected to the person.
Any gifts outside this scope require Court approval before the attorney can proceed.
What Cannot Be Given as a Gift?
Gifts that are likely to require Court of Protection approval include:
- Making a loan from the person’s funds
- Making a large gift
- Creating a trust of the person’s property
- Living rent-free in a property owned by the person
- Selling a property for less than its value or transferring it into someone else’s name
- Changing the will of someone who has died by using a deed of variation to redirect or redistribute the person’s share in the estate
- Maintaining someone other than the person, such as paying for school fees (see ‘providing for others’ needs’)
- Removal of cash assets, which reduces the size of the person’s estate
What Is the Deliberate Deprivation of Assets?
Attorneys and Deputies cannot intentionally reduce assets, particularly if assets are required to fund care. This is known as deliberate deprivation of assets. Examples of deliberate deprivation of assets include making a large payment to someone else or spending money in an extravagant way which is out of character. If a deprivation occurs, local authorities can include those assets in any financial assessment, and they may:
- Treat the gifted asset as if it is still owned by the donor/P
- Recover the value of the asset
- Initiate legal proceedings
- Remove an attorney or deputy
Can Attorneys Make Gifts the Donor Would Have Ordinarily Made?
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 which the donor supported or might have supported. However, the attorneys must comply with any express restrictions contained within the power of attorney document.
What Is a Reasonable Gift?
There is no legal definition of a reasonable gift. Attorneys must consider:
- The impact of the gift on the donor’s financial position
- Whether it would be in the donor’s best interests.
Before making any gifts on behalf of the donor, the attorney should also consider 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.
Can Deputies Make Gifts the Donor Would Have Originally Made?
The Deputy Order itself will set out the extent of the authority to make gifts. Court approval must be sought for anything beyond this scope, or if there is no permission contained within the Deputy Order.
Are There Any Gifts Outside the Authority of the Attorney or Deputy?
Some gifts may be ‘de minimis’, meaning they’re beyond the authority of the attorney/deputy but do not justify an application to the court.
This usually applies where:
- The donor/P has an estate worth more than the inheritance tax (IHT) nil rate band (currently £325,000)
- The donor/P has a life expectancy of less than five years
- The gifts are affordable considering care costs and standard of living
- 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 10 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 overstepping 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.
How Can Howell Jones Solicitors Help?
Understanding the Court of Protection process and understanding the legal implications can be complex. It is essential to seek legal guidance and support from experienced professionals who specialise in Court of Protection matters.
At Howell Jones, Surrey solicitors, we have an experienced, dedicated, and award-winning Elderly and Vulnerable Client Services Team that specialises in all aspects of Court of Protection matters. We can provide personalised advice, assist with applications, and ensure compliance with the relevant laws and regulations. We will help address any concerns or disputes related to the decision-making process.
If you have any concerns about yourself or a loved one and would like to get some further advice about Lasting Powers of Attorney or a Deputyship Order, please get in touch with our Elderly and Vulnerable Client team, who will be delighted to help.
