An attorney acting under a Power of Attorney may have the ability to make gifts to others on the donor's behalf. The power to make gifts by an attorney (acting under a Lasting Power or an Enduring Power) or a deputy is very restricted.
A gift is defined as when ownership of money, property or possessions is moved from the person whose affairs are being managed to others.
There have recently been some important clarifications on guidance for professional deputies and attorneys on making gifts of a protected person's property.
If an attorney wants to make a gift that falls outside a list of approved “exceptions” they must apply to the Court of Protection (CoP) for approval.
The guidance highlights that any gift of property such as land or a house – whether it’s the whole property or a share – is almost certainly outside of the attorney's powers despite what the donor might have said when they had mental capacity.
To make such a gift, they are likely to have to apply to the CoP for permission, which can be refused.
Even if the donor apparently has the capacity to make a gift, the attorney must still exercise caution. If a substantial gift is involved, the attorney may need to seek advice or arrange for a mental capacity assessment, or possibly both. If the donor lacks capacity then, as with all decisions an attorney makes, the main test is whether it is in the donor’s best interests.
The “best interests test” centres around several considerations. It’s important to think about whether the person had made similar gifts in the past, for example, a regular cash gift to a grandchild at Christmas or birthday, perhaps. It is also important to assess if the gift is affordable in relation to the size of the estate, and if it could interfere with their Will and any inheritance tax due on their death.
Unsurprisingly, the guidance suggests that particular care should be taken if an attorney is to receive a gift for themselves. There is a clear potential for a conflict of interests and an attorney must not take advantage of their position to personally benefit.
Paula Steele, managing partner at John Lamb Financial Planning, says: “These clarifications are very important. The Office of the Public Guardian can investigate any gifts made under an LPA or EPA at any time and may ask to see evidence of any gifts made. It is important to 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 will be imposed on attorneys for any unauthorised or excessive gifts given outside of the attorney’s powers.”