The Office of the Public Guardian has recently published a revised practice note (PN7) that sets out further guidance for professional deputies and attorneys appointed under a registered Lasting Power of Attorney for property and financial affairs. The amended guidelines give advice on the regulations of giving gifts – we highlight the key measures to take note of.
There are strict rules about making gifts on a person’s behalf, and certain gifts or investments may require Court of Protection approval. Gift giving can have a broad definition; it is not just using the donor’s money to buy something for someone else on a birthday or other customary occasion or giving another person money or possessions. It can include donations to charities; paying school fees; allowing someone to live rent-free; selling the person’s home at an undervalue; or giving an interest-free loan.
Before giving a gift, the deputy or attorney must first consider if the person has the mental capacity to understand the decision to gift and if they can take part in that decision. If they do, then they should make the gift themselves. Ultimately, the gift should be in the donor’s best interests; the terms of the specific Enduring Power of Attorney or Lasting Power of Attorney are to be followed. To determine the donor’s capacity, an assessment should be made against the criteria set out in section 3 of the Mental Capacity Act 2005.
Any gift to yourself requires great care; an attorney or deputy must not take advantage of their position. Any conflicts of interest between the attorney and donor will be looked at critically.
The general rule is that deputies and attorneys must not make gifts unless they fall into the exceptions. For attorneys acting under a registered LPA, these are:
Attorneys acting under an EPA are governed by similar, but narrower criteria. For an EPA it must be:
To determine whether a gift is reasonable, you must consider whether the EPA/LPA is registered or not:
When considering what is in a person’s best interest you should consider;
The gift of a house or land is outside the powers of a deputy or attorney to gift and requires an Order from the Court of Protection.
In deciding whether gifts are reasonable, you should also consider whether:
You can take account of the person’s Will when making gift decisions, as it is an indication of the person’s wishes.
If you want to make a gift that you lack authority to make, you will need to apply to the Court of Protection. The OPG cannot generally approve a gift or loan except when you exceed your authority in a minor way. The exceptions can cover:
You cannot carry out inheritance tax planning without the Court’s permission. The minimum exceptions do not apply to:
Most deputy orders will potentially allow a deputy to look after the needs of anyone related or connected to the person. Attorneys may onlybenefit themselves if the person might have provided for those needs themselves.
The Mental Capacity Act 2005 does not directly permit attorneys to benefit themselves or other people by providing for their needs, but this may be permitted if there is a legal obligation to maintain. In the event of making any unauthorised gifts, the OPG can investigate and ask for an explanation of either a deputy or attorney.
The person’s money should be kept separate from your own, and a record of all transactions maintained.
Any gifts made beyond your authority without approval from the Court of Protection would entitle the OPG to:
Any attempt to remove assets from a person’s income, savings or capital sums to avoid liability or future care home fees can be reversed if there is evidence of a deliberate deprivation of capital or assets.
Taking on the position of either deputy or attorney for a person’s property and financial affairs is a position of responsibility and accountability. There is often pressure on lay deputies to do the right thing by the person that they act for. A deputy or attorney may feel they are being scrutinized, rightly or wrongly, by close members of the family or by the OPG. Deputies, in particular, do not need to feel isolated – the OPG is there for providing guidance when required. In the event of being at all unsure on the making of gifts or investments, a review of the practice note available on the Office of the Public Guardian website is a good starting point.
If you are an attorney or deputy appointed under a Lasting Power of Attorney and would like further advice relating to the new guidelines on Gifts, Pinney Talfourd are here to help. We have an experienced and dedicated team of specialist solicitors based in our offices across Essex and London. We have evening and weekend appointments available for clients that find it difficult to arrange meetings during working hours.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.