If you have been appointed as a property and financial affairs deputy, or if you are acting as an attorney under a property and financial affairs Lasting Power of Attorney (LPA) for a relative or friend, known as the donor, you will realise fairly soon that this can be a challenging and time-consuming role. There are many things to consider when looking after someone else’s money.
You may be considering making gifts of the donor’s money to family members, friends, charities or possibly to yourself. There may be a number of reasons for considering gifts, it may be something the donor would have wanted to do had they retained the ability to manage their affairs, or a gift may be contemplated to try and save inheritance tax payable on the donor’s estate.
Permission to make a gift
It is important to realise that if you are acting as an attorney or deputy, you cannot do whatever you want. If unauthorised gifts are made by an attorney, these may well be picked up and queried at a later date. Attorneys can be ordered to produce an account of their dealings with the donor’s money and to explain the reasons for making the gifts. Attorneys may be ordered to pay the money back, or in some cases an attorney can be removed and an independent deputy appointed by the Court. HMRC also asks for details of gifts made by a deceased person, a copy of a power of attorney and if Court authorisation was obtained for the gift.
The law relating to gifting by an attorney
As an attorney, you have limited powers to make gifts of the donor’s money. An attorney can make gifts to friends and family of the donor on particular occasions, such as Christmas or birthdays. The gifts should be reasonable in terms of size, taking into account the donor’s resources and all other relevant circumstances, such as income and anticipated outgoings. If the proposed gift is larger in size relative to the donor’s estate, or if it is not of a seasonal nature, then the attorney should apply to the Court of Protection for authority to make the gift.
The Court of Protection has powers to safeguard vulnerable and incapacitated individuals, and to make decisions for those individuals. The Court of Protection also ensures that any decisions made on behalf of an incapacitated person are in that person’s best interests.
If you are a court-appointed deputy, your powers are set out in the deputyship order. Typically, the authority of the deputy is similar in scope to that of an attorney. It is usual to apply for authority to make gifts of the donor’s money. In reaching any decision on authorisation of a gift, the court will look at all relevant circumstances before reaching a decision.
If you are in any doubt whether to make a gift, or any other aspect of your role as attorney or deputy, TWM can help you. We offer an initial meeting at no charge to discuss your particular situation and concerns and would follow up, at an agreed cost, with a written report of advice, in terms of next steps and the scope of your authority. These costs would be payable from the assets of the person for whom you are appointed attorney or deputy.
For more information or advice, please contact Jeremy at firstname.lastname@example.org.
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