Acting as a Court of Protection deputy or attorney under a Power of Attorney: making gifts on behalf of someone else

Gift giving is a demonstration of the value we attribute to our family and friends as well as those social causes close to our hearts.

Almost all of us will be in the habit of making gifts, be that to individuals on special personal and religious occasions or to wider social and charitable organisations. Whilst there may be good fiscal reasons (tax advantages) for doing so, gifting strengthens connections, breeds reciprocity and, fundamentally, makes us feel good.

Can a gift be made by an attorney or deputy using another’s funds?

It is well established law that, subject to certain exceptions, attorneys and deputies may not make gifts from the estate of the individual for whom they act. It is important to recognise what amounts to a “gift” as it covers a wider range of things in addition to giving away money and can include:

• Donations to charities
• Paying for school fees
• Living rent free or at a reduced rate in the donor/patient’s property
• Selling the donor/patient’s home at a reduced rate
• Creating a trust for someone from the donor/patient’s property
• Giving someone an interest free loan

So, what are the exceptions where attorneys and deputies may make gifts?

Lasting Powers of Attorney: The Mental Capacity Act 2005 (MCA) allows attorneys acting under a properly registered property and finances Lasting Power of Attorney (LPA) to make gifts, which must be reasonable having regard to the circumstances of the donor – including the size of his estate:

1. on customary occasions to persons (including himself) who are related to or connected with the donor, or
2. to any charity to whom the donor made or might have been expected to make gifts.

The MCA defines “customary occasion” as:

1. the occasion or anniversary of a birth, a marriage or the formation of a civil partnership, or
2. any other occasion on which presents are customarily given within families or among friends or associates.

Enduring Powers of Attorney: The MCA provides a slightly narrower authority for attorneys acting under one of the old Enduring Powers of Attorney (registered or unregistered), who must ensure that the gift is:

1. Of a seasonal nature (for example, a Christmas present) or is to be given on the anniversary of a birth, marriage or civil partnership
2. Made to someone (including the attorney) related or connected to the donor or to a charity the donor supported or might have supported
3. Of a not unreasonable value, taking into account all the circumstances and, in particular, the size of the person’s estate

Furthermore, both Lasting and Enduring Attorneys must comply with any express restrictions provide for by the power of attorney document itself.

Court of Protection deputy: Where a financial deputy has been appointed for the individual, the order itself will set out the extent of the authority to make gifts and is usually similar to the authority provided to attorneys.

What must an attorney or deputy do if they wish to make a gift outside of those exceptions?

They must apply to the Court of Protection for authority unless the proposed gift(s) is/are of such a minor nature as to make an application to the Court of Protection disproportionate. These so called de minimis exceptions only apply where the value of the individual’s estate is £325,000 or more.

What happens if an unauthorised gift is made?

With the consequences for an attorney or deputy making and unauthorised gift ranging from a formal warning to possible prosecution for fraud, it is essential to approach the question of gifting for someone else with care and ensure that:

1. They cannot make the decision for themselves;
2. The proposed gift is in their best interests;
3. The gift is of a reasonable value in relation to their particular circumstances; and either
4. It falls within one of the exceptions provided by the Mental Capacity Act; or
5. You have obtained the authority from the Court of Protection to make the gift

If in any doubt, clarifying with legal input is essential.

Dealing with the affairs of mentally incapacitated individuals requires specialist advice. Our expert Court of Protection solicitors are on hand to provide specialist and sensitive advice.

This insight was co-produced by Paralegals, Rikesh Chauhan and Rachel Curtis.