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8 min read 31 Jan 22
Can an attorney or court appointed deputy make gifts on behalf of another person?
The Office of the Public Guardian (OPG) protects people in England and Wales who may not have the mental capacity to make decisions on issues such as their health and finance for themselves.
The OPG has published advice for attorneys and court appointed deputies when making gifts on behalf of another person. See here.
In broad terms, the rules on making gifts are designed to protect the person's best interests and ensure attorneys and deputies look after the person's financial interests with even more care than their own.
What counts as a gift in an individual's role as a deputy or attorney may be broader than first thought. Gift-giving is not just using the person's money to buy something for someone else on a birthday or other 'customary occasion', nor is it just giving the person's money or possessions to another person. Gift-giving also includes:
From a financial planning perspective, common insurance company trust arrangements such as gift trusts, probate trusts, discounted gift and loan trusts will all give rise to a gift.
Fundamentally, those whose property and finances are being looked after should decide whether to make a gift if they have mental capacity. It is only when the person can't make – or help to make – their own decisions about gifts, can the attorney or deputy decide for them. In such a situation, the guidance advises these individuals to consider:
Unless the paperwork says otherwise, an attorney or deputy can only make a gift if it's either:
In both cases, it is essential the gift is of reasonable value given the size of the person's estate.
A customary occasion means, for example, a birth, a birthday, a wedding or civil partnership or an anniversary. It also includes occasions where families, friends or associates customarily give gifts, such as Christmas, Eid, Diwali, Hanukkah or Chinese new year.
The gift can't go to a person or organisation unconnected to the gift-giver.
When deciding whether a gift is reasonable, the attorney or deputy should consider:
Gifts must always be well within what the person can comfortably afford. 'Affordable' varies a lot from person to person. A £200 gift has a bigger impact on someone with £9,000 than someone with £90,000.
Any gifts made on behalf of someone else must be recorded. Deputies need to record gifts in their annual report, and in the case of attorneys, the OPG may ask for gifts made to be accounted for.
Deputies and attorneys can't give the person's property away as gifts, or spend their money on gifts, to avoid contributing to care home costs. The law calls this 'deprivation of assets'.
When local authorities check a person's assets to see how much he/she should pay for care, they may include assets which have been deliberately given away to avoid paying for care.
If an attorney or deputy wishes to increase the limits on the gifts which can be made, then application must be made to the Court of Protection. An application to the court is necessary to make gifts to people or organisations not authorised in the power of attorney or deputy order. The OPG can't approve a gift by an attorney or deputy; only the Court of Protection can do this.
If an attorney or deputy can answer 'yes' to all three questions below, then no permission is required from the Court of Protection to make a gift:
The Court of Protection has recognised that there are times where an attorney or deputy may want to make gifts which are outwith their authority but do not justify an application to the courts. They have given guidance on what they are willing to accept without a court application which they have called the “de minimis exceptions”.
As long as the person’s estate is worth more than £325,000, the exceptions can be taken as covering the annual Inheritance Tax (IHT) exemption of £3,000 and the annual small gifts exemption of £250 per person, up to a maximum of, say, 10 people when:
Being able to gift small amounts up to the IHT exemption without the permission of the court doesn’t mean that they can carry out IHT planning without the court’s permission.
The ‘de minimis’ exceptions do not apply to the following:
If a gift is made beyond the powers of the deputy or attorney, the OPG might:
If the person is a deputy, the OPG might also:
The OPG protects people in England and Wales who may not have the mental capacity to make decisions for themselves concerning health and finance. In Scotland, the equivalent body is the Office of the Public Guardian in Scotland. In Northern Ireland, The Office of Care and Protection (Patients Section) performs a similar role.
It is worthy of note that in Scotland, it’s possible to create a continuing power of attorney over property and financial affairs which is intended to continue, or, (where so specified) to start, to have effect in the event of the individual becoming mentally incapable. It is possible to include powers for the attorney to make gifts, and if desired limits can be imposed on the size of such gifts or the potential recipients.
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