Making Gifts as an Attorney or a Deputy

Attorneys acting under an Enduring or Lasting Power of Attorney, or deputies appointed by the Court of Protection, should be aware of their limited power to make gifts from the funds they manage.

Any gifts made must always be in the best interests of the incapacitated person. The attorney or deputy has a duty at all times to protect the interests of the person they are looking after and not allow personal interests to come into conflict with their role.

What counts as a gift?

Gifts are not just defined as using a person’s money to buy something for someone else (including you) such as on a birthday or at Christmas. A gift can be where you move the ownership of an asset from the person whose affairs you manage to yourself or to another person, without full payment in return.

It can also include:-

  • giving the person’s money or possessions to another person
  • donations to charity
  • paying someone’s school or university fees
  • living rent free or at a ‘friend/family’ rate in a property belonging to the person
  • selling the person’s property less than the market value

Who can give gifts?

Provided the person has mental capacity they should be the one making a decision about any gifts being made. The decision should be their own without the influence or pressure from others. Where possible the gift should also be made by the person themselves if they have capacity and not by you on their behalf.

If the person’s mental capacity changes and they can sometimes make decisions about things such as gifts, you must try to involve them in any gift-giving decisions. This means taking the time to communicate with them about the gift being proposed.

If the person cannot decide and you have taken all steps to help them make their own decision then the attorney/deputy can make the decision for them.

Agreeing to make a gift from the person’s finances must be in the person’s best interest and the following should be considered:-

  • the person’s wishes, views and values and how these might affect what they give
  • what family members and friends think they would have wanted
  • whether they might regain capacity and be able to make a decision about the gift
  • the person’s current needs – consider whether the person can still afford to make the gift now, taking into account their current circumstances

Who can you make a gift to?

A gift can only be made to a family member, friend or acquaintance of the person on a ‘Customary Occasion’. A gift can also be made to charities to which the person has some connection or if they have given money to them in the past.

When can gifts be made?

A gift can be made on ‘Customary Occasions’ for example, birth, birthdays, wedding/civil partnership or an anniversary. This also includes Christmas, Diwali and Chinese New Year etc.

How much can the gift be?

A gift must be reasonable; however there is no clear definition as to what this amounts to. In any event the gift must be of reasonable value given the size of the person’s estate and financial situation.

When considering whether or not a gift is reasonable the following points should be considered:-

  • The impact of the gift on the person’s financial situation. Consider both the person’s current and future income, assets, capital and savings but also their present and future needs.
  • Whether the gift would be in the person’s best interests. For example is this a gift the person would normally have made before they lost capacity and would the gift affect that persons financial affairs to an extent that they cannot meet their living expenses in the future, for example.
    If the gift is seen as unreasonable you could be breaking the law.

A gift must also be ‘affordable’ and should not leave the person in a worse financial position. For example a gift of £500 has a bigger impact on someone with £10,000 than someone with £100,000.

It is always good practice for an attorney to keep a record of any gifts made and for deputies such gifts must be recorded on the annual report to the Court of Protection.

It is worth noting that attorneys and deputies cannot give away the person’s property as gifts, or spend their money on gifts, to avoid contributing to care home costs. If it is believed that gifts were made in this manner then it could be seen as a deprivation of assets and the local authority may include the value of any such gifts when assessing the financial position.

Remember that when a local authority carries out a financial assessment for residential care it will ask about previously-owned assets, not just those that are owned currently. If the local authority funds someone’s residential care costs and later rules that a person has ‘deliberately deprived’ themselves of assets, they have the power to claim care costs from the person that the assets were transferred to.

This includes giving away things as gifts to make the person qualify for benefits or for government help with care costs etc.

Consent to make a gift

If in any doubt whether a gift is reasonable or for a gift not on a ‘Customary Occasion’ (as set out above), deputies and attorneys should apply to the Court of Protection for permission to make gift(s).

The Court of Protection will then assess whether such gift should be given. Please note that the Office of the Public Guardian cannot make such decisions.

If you make gifts that go beyond your authority without getting prior approval from the Court of Protection, the Court may:-

  • Apply to have you removed as an attorney or deputy
  • Apply to have your role as an attorney or deputy suspended and freeze the persons accounts for their own protection
  • Ask that the gifts are returned
  • Refer the matter to the police or other organisations with legal powers

Should you have any concerns about your role as an attorney or deputy and would like to discuss matters in more detail please contact a member of our team on 01245 504904.

Jenna is an Associate Solicitor in our Private Client team. She acts for clients on matters including making Wills, preparation and registration of Lasting Powers of Attorney, Deputyship applications with the Court of Protection and Probate work.