Clients acting as an attorney or deputy for a person who are unable to make their own decisions often ask whether they can make gifts on that person’s behalf and what rules they are required to follow whilst acting in this capacity. It could be that they have been appointed as either an attorney under a Lasting Power of Attorney (LPA) or appointed as a deputy by the Court of Protection.

What is a gift?

For a deputy or attorney, a gift is when you move ownership of any money, property, or other possession from the person whose affairs you manage to either yourself or to other people, without payment in return.

The general rule about giving gifts is that the law says you must not make gifts from the person’s estate (unless certain exceptions apply). As a deputy or attorney, you have limited power to make gifts on another person’s behalf. If you wish to make a gift that falls outside the restrictions in the law, powers of attorney, and deputyship order – and it goes beyond your authority to give these gifts – you must apply to the Court of Protection for approval beforehand.

Gift Requirements

The Mental Capacity Act 2005 only allows you to give a gift in certain circumstances. For attorneys acting under an LPA; the gift must satisfy all three points:

1. Given on a customary occasion (e.g. birthdays, weddings or civil partnerships, Christmas, Eid, Hanukkah etc);
2. Be given to someone either related or connected to the person or (if not a person) to a charity the person supported or might have supported; and
3. Be of reasonable value, affordable taking into account the circumstances in each case, and be in the best interests of the person who is allowing the gift to be given.

For those acting under a previous Power of Attorney (EPA) or appointed by the Court; they are still required to satisfy the above points, however they are slightly varied and narrower and would need to be looked at in closer detail.

Capacity

Before making a gift, you must consider whether the person who wants you to give the gift:

1. Has mental capacity to understand their decision to give a gift; and
2. Can take part in the decision making.

If the law allows a gift to be made, you must involve the person in the decision, as it is their gift to make. If they lack capacity, you should still consult them and encourage their participation where possible to understand their wishes and feelings. These must be taken into account when deciding whether the gift is in their best interests and is reasonable.

In order to determine whether the person making the gift has capacity, you have to be able to judge that the person understands the information relevant to the decision, that they are able to retain that information, and that they can weigh up or use that information to communicate their decision clearly. If the person has capacity to make a gift, then they should make the gift themselves, rather than tell you to make the decision on their behalf.

If a gift of substantial value is involved and you are unsure as to whether the person giving the gift has capacity; you may need to seek independent legal advice. You should keep a record of the steps you took to make sure they have capacity, as the Office for the Public Guardian may ask you at any stage to explain your decision, and others could challenge you later.

What is defined as reasonable value?

Currently, there is no definition for a  ‘reasonable’ or ‘unreasonable’ gift in this situation. It is something which you are expected to decide based upon the following factors:

1. The impact of the gift on the person’s financial situation;
2. Whether making the gift would be in the person’s best interests; and
3. The current and future needs of the person.

Further points to raise

• Use of the person’s funds to benefit someone else is not a gift when there is an obligation to maintain that person.
• Any gift or transfer of property – either whole or in part – is outside of your powers as a deputy or attorney.
• Attorneys and deputies must not take advantage of their position or put themselves in a position where their personal interests conflict with their duties.
• Deputies and attorneys must not allow any other influences to affect the way they act, and decisions should always benefit the person giving the gift.
• Attorneys appointed under an LPA do not have authority to take loans from the person’s funds for themselves or anyone else.

At JWP Solicitors, our Private Client team provides clear, practical advice tailored to your circumstances. Contact us today to arrange an appointment.