Are you an Attorney? Common questions about gifting….

We are often asked by people acting as Attorneys whether they can gift some of the money that belongs to the person whose finances they look after (called the donor) to themselves, other family members or charity.

However there are rules about how an Attorney should look after the donor’s money that allow gifting only in strictly limited circumstances….

What if the donor has capacity to decide whether to make a gift?

If the donor has capacity to decide to make a gift then there is no problem. 

What do I do if I think the donor does not have capacity?

The test for capacity is set out in the Mental Capacity Act 2005 and there is helpful guidance in the Code of Practice for Attorneys.  It is worth noting that capacity is not fixed and can vary from day to day according to the decision that needs to be made – if you need further help please contact a member of our team.

How much can the donor give away? 

If they receive benefits or contribute towards a care package (or may be expected to do so in the future) there can be financial repercussions if an excessive amount of money or property is given away and they then want to seek financial support from the Local Authority.  Contrary to popular belief, if the donor (or Attorney) make gifts to avoid paying care fees there is no ‘seven year’ protection.

What if the donor doesn’t have capacity and I, as Attorney have to decide?

In your role as Attorney you must always act in good faith and the best interests of the donor.  You have a duty not to take advantage of your position. 

The only gifts that are permissible for you to make to family and friends are those made on customary occasions (such as Birthdays/Christmas) or to a charity that the donor may have wanted to give to.

In addition to this you must follow the donor’s historic ‘pattern of gifting’ – for example, if they used to give £20 to grandchildren at Christmas you cannot increase this to £100.

Can’t I give away £3000 per year?

People often mistakenly believe that they are ‘allowed’ by the tax man to give away £3,000 a year.  This amount relates to inheritance tax rules and should be dealt with as a separate issue. 

What if I do want to make a large gift?

If, as Attorney you want to make larger gifts you must apply to the Court of Protection for permission to do so even if within the Lasting Power of Attorney the donor has confirmed he is happy for such gifts to be made. 

Without authority the gift would not be valid and you may find that you are asked to give the money back!

Whilst costly to refer the matter to Court, applications are often successful.  The Court will consider the donor’s previous wishes and feelings.  For example, if they financially support a family member it is reasonable to assume that they would want to continue to do so in the future even though they now lack capacity to consent to this.  There may be young dependent children or grandchildren who need support or a family member may have stopped work to provide care and as such it is reasonable for them to be paid. 

The Judge will want to be satisfied that any proposed gift is reasonable and of course, most importantly, affordable.  However, if evidence is produced confirming this, in all of these examples the Court is likely to allow the gift.

I am not sure what to do!

Becoming an Attorney can be daunting, but help and advice is available to enable you to provide the best support possible.  If you want to understand more about your role, including gifting please contact a member of the team.

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