Donees under a Lasting Power of Attorney (Property and Finance) have the legal authority to make gifts on behalf of the individual’s behalf, but the right to do so is not unqualified.
The need to understand the limits to which an attorney can give gifts on behalf of someone who lacks capacity (the donor) has never been so important given the risks of being accused of financial abuse. New guidance helpfully steers attorneys on the circumstances in which they can make gifts on the donor’s behalf.
We understand that financial affairs attorneys are sometimes nervous about the prospect of making decisions about giving away gifts on a donor’s behalf. Please contact our private client team and we can advise you on your responsibilities and the steps you can take.
The Court of Protection may need to authorise significant gifts and we can help you with your applications.
OPG Guidance
The Office of the Public Guardian (OPG) recently issued updated guidance on the authority of attorneys (and court-appointed deputies) to make gifts. The guidance reminds attorneys that they need to understand the strict and limited rules on gift-making under a financial LPA.
The donor’s best interests are central to these decisions. The key principles are:
- You can give a gift on the donor’s behalf only in certain circumstances. This is usually limited to “occasional gifts of small amounts on customary occasions” (eg birthdays, weddings, Christmas or other religious dates)
- The recipient of the gift must be ‘connected’ to the donor, ie a close family member (or a charity the donor supports). An attorney is not excluded simply because they are connected to the person
- Gifts must be reasonable. What is ‘reasonable’ for these purposes is not defined, but it will depend on the context, timing and value of the estate
- Your power to make gifts may be restricted by the LPA, so the terms of the LPA should be checked
- Gifts must be affordable given the donor’s income, assets and savings and other relevant factors. The guidance makes clear that if a substantial gift is involved, consider seeking independent legal advice and/or arrange for a mental capacity assessment of the donor
- Gifts must be in the donor’s best interests, otherwise you may need prior authority from the Court of Protection
- You must try to determine if the donor has capacity to make the specific decision about the potential gift themselves. If they have capacity, the donor should normally make the gift themselves
- You must consider whether the donor has mental capacity to understand the decision to give a gift; or if they can take part in making the decision itself.
It is important to keep contemporaneous notes recording your decision-making process in case you are challenged after a gift has been made. Also make sure you keep accurate financial records of gifts made, and other transactions, to ensure you are being open and transparent in your role as a financial attorney.
When can the OPG step in?
We cannot stress enough that attorneys must exercise caution before making any gifts, because the OPG can take action if you exceed your authority under an LPA. If you don’t understand your legal responsibilities, you could inadvertently exceed your authority.
The last thing any attorney wants is to risk being challenged by family members and referred to the OPG or, worse, accused of financial abuse.
The OPG can decide to investigate and ask you to explain any gifts (or other financial transactions) you have made as an attorney. If you are found to have exceeded your authority, you could be suspended or removed as attorney and required to return the gift/s made.
How we can help
If you need support when exercising your rights and duties under a Lasting Power of Attorney, get in touch with our specialist private client team. You can contact Nansi Webb on 01562 820181; or email nansi.webb @mfgsolicitors.com.