Making Christmas Gifts as an Attorney
If you are appointed as an attorney under a registered lasting power of attorney for property and financial affairs, or a registered enduring power…
If you are appointed as an attorney under a registered lasting power of attorney for property and financial affairs, or a registered enduring power of attorney, then you may be considering making Christmas gifts on behalf of the donor (the person who appointed you as their attorney) to their friends and family. There are specific rules governing how such gifts can be made which, if ignored, can lead to fines being imposed on the attorneys in their personal capacity. We include an overview of the considerations that need to be made to ensure that your Christmas is as merry and stress-free as possible.
When making a gift in your role as an attorney, first and foremost, the donor’s needs and best interests must be considered. These are paramount when acting as an attorney and will be discussed further below. Secondly, you must check the lasting power of attorney document to ensure that there are no restrictions on you making gifts and that any imposed conditions are followed.
The Mental Capacity Act 2005, section 12 deals with attorneys making gifts on the donor’s behalf. Gifts may be made on customary occasions (birthdays, anniversaries etc.) and any other occasion when they would have usually given gifts to the donor’s family or friends (Christmas, Eid, Diwali etc.). This can include gifts to the attorney, but caution should be exercised. NB - if the attorneys are acting under an enduring power of attorney, these occasions are limited to those of a seasonal nature or on an anniversary of a birth, marriage or civil partnership.
Gifts can also be made to any charity to whom the donor previously made or might have been expected to make gifts.
Case law has provided attorneys with some guidance as to what could be classified as a reasonable gift. In one case, the judge identified a reasonableness threshold of £5,500 annually per donor (representing the annual inheritance tax exemption of £3,000, and the annual small gifts exception of £250 up to a maximum of 10 people), in the following circumstances:
• The donor has a life expectancy of less than five years;
• The donor’s estate exceeds the inheritance tax nil rate band (currently at £325,000);
• The gifts were considered to be affordable, taking into account the donor’s care costs and would not adversely affect the donor’s standard of care and quality of life; and
• There is no evidence that the donor would oppose the extent of the gifts made on their behalf.
To make larger gifts, say for inheritance tax planning purposes or gifts that are not considered customary, you would 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 also advise and assist you with such an application.
Despite this guidance, it is essential that attorneys always consider the individual circumstances of the donor.
Attorneys are not obliged to make gifts on the donor's behalf so they should use their discretion when deciding to do so. It is also recommended that attorneys try to involve the donor in the decision making process wherever possible when deciding whether to make a gift.
Retaining evidence of gifts
Any gifts made by an attorney on behalf of the donor can be investigated by the Office of the Public Guardian at any time and they may ask to see evidence of any gifts made. It is therefore strongly advisable that attorneys keep a record of all gifts given on the donor’s behalf specifying the value of the gift and the circumstances in which the gift was made.
Penalties can be imposed on attorneys for any unauthorised or excessive gifts given outside of the attorney’s powers. Ignorance of the law regarding an attorney's duties and responsibilities will not be deemed a valid excuse. At the very least, attorneys should be aware of the “Information you must Read” section on the lasting power of attorney document and, preferably, attorneys need to be familiar with the requirements of Code of Practice set out in the Mental Capacity Act 2005
For further advice on your duties as an attorney, please contact Weightmans and ask to speak to a member of the Wills, Trusts and Estate team.