Powers of Attorney (whether they be Lasting Powers of Attorney for Finance, Enduring Powers of Attorney or Court of Protection Deputyship Orders) give an individual the authority to access a person’s financial assets. This includes their bank accounts and investments as well as the authority to sell, transfer or mortgage their home.
While the donor (person who grants the power of attorney) has capacity, the attorney should act on their authority and at their direction. If the donor loses capacity then the attorney should act in the donor’s best interests.
So where do gifts fit into this?
Under the Mental Capacity Act 2005, attorneys are permitted to make gifts in certain circumstances. For deputies there will generally be authority included in the court order to grant the same powers. This allows the attorney or deputy to make gifts to close family and friends on special occasions (birthdays, anniversaries, Christmas) or gifts to charities that the donor had previously supported or towards causes that are important to the donor. Any such gifts must be of a reasonable amount. Reasonableness is judged based on the size of the donor’s estate and their ongoing needs.
Any gifts outside this limited exception require the authorisation of the Court of Protection.
It is fairly easy to see why these restrictions are needed; it would be all too tempting for an attorney, with unfettered access to a person’s finances, to start making gifts. However there can be very good reasons why more substantial lifetime gifting would be in the donor’s best interest. This would generally be to undertake tax planning, but can also be to provide for a family member in need.
The procedure for applying to the Court of Protection will vary depending on the root of the attorney’s authority. Applications to make gifts can also be made by a person who is not appointed as an attorney or deputy, but would usually be in conjunction with an application for a deputyship order. The Court of Protection may ask the Official Solicitor to act as litigation friend for the donor, to ensure that they are separately represented and that any decision keeps their interests in mind.
It is therefore important that there is a clear plan in place as to why any proposed gifts are required and showing that they are in the donor’s best interest.
Please contact Ashley Minott on 01494 893518 or email@example.com if you are acting as an attorney and wish to discuss your authority to make gifts on the donor’s behalf or if you require assistance with an application to the Court of Protection.