Can I make a gift on behalf of someone who lacks capacity to do so themselves?
Many attorneys and deputies think that, once they are appointed to look after someone’s finances, they have complete discretion over that person’s spending. It can come as something of a surprise to realise that there are strict rule about the gifts you can make on behalf of the person whose finances you look after.
The rules relating to gifts are set out in the Mental Capacity Act 2005 and they can also be further restricted in the Power of Attorney or Deputyship Order. As a general guide, gifting on behalf of someone who has lost mental capacity must follow their historic pattern, and be proportionate. So, for example, if your mother has always given the grandchildren £50 on their birthdays, you can continue to do so, as long as this is still affordable for her.
However, there are many situations where it would make sense to gift more than is permitted not least where inheritance tax planning is an issue. In order to do this, an application for permission to gift has to be made to the Court of Protection to authorisation ‘statutory gifting’.
June’s case
Following the death of her husband, June’s capital and income increased significantly. When she was well she was always generous to family members but, following a severe stroke, her children (who were also her attorneys) were unsure what to do especially as June would be liable for inheritance tax when she did pass away.
We spent time, with June’s family and financial adviser, reviewing her assets in great detail, in order to prepare an application to the Court of Protection for permission to make statutory gifts to reduce the size of June’s estate and her inheritance tax liability. We were able to show June’s previous gifting history to her family and how further statutory gifting would have been something that she would have wanted. We were also able to demonstrate that we would be preserving enough assets for June to ensure she would benefit from a high standard of care for the rest of her life.
We can help
A properly evidenced and thorough statutory gifting application is likely to be approved by the Court of Protection, where it can be shown that it is in the incapacitated person’s best interests and what they would have wanted. Here at Moore & Tibbits, our Senior Solicitor Marie O’Malley has practical, up to date of experience completing successful applications and can offer support and representation tailored to your circumstances.