F was appointed as Deputy for his brother, M, who had become mentally incapable. M, has an estate of over £17 million, and investment income of £123,000 a year. As M's care is being paid for by the NHS, his annual expenditure is only £16,000, so his estate can easily cover that for the remainder of his life.
F applied to the Court of Protection for permission to give away some of the estate now, to avoid Inheritance Tax (IHT). F proposed to give away £1.2million of M's estate to his four siblings, paid out of the estate's accumulated, and separately marked, surplus income. He also asked to pay a further £790,000 to M's charitable beneficiaries, but this to be paid out of the estate capital. M had made a series of gifts to those charities before he lost capacity.
F's application was partially opposed by the Official Solicitor. She urged that the proposed £1.2million one-off gift should instead be split 60-40 between M's siblings and the charities, and subsequent annual gifts of his surplus income should be distributed in the same way. This would avoid the erosion of M's capital without court oversight.
The Court of Protection accepted the Official Solicitor's argument that it was not clear what M would have done had he retained capacity, but also noted that the family gifts fall within the Deputy's automatic authority (because the gift would be of a reasonable value not affecting the person's ability to meet their living expenses). Therefore, they approved F's application to make the substantial gifts.
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