The Office of the Public Guardian (OPG) sets outs the legal guidance for deputies (appointed by the Court of Protection) and attorneys (appointed under a property and affairs Lasting Power of Attorney) in regard to giving gifts on behalf of the person they act for. Deputies and attorneys have limited powers to make gifts on behalf of someone they are looking after, providing the value of the gifts is not unreasonable considering their financial or other assets. As a deputy or attorney, you can also apply to the court for permission to make larger or more unusual gifts.
It may also be necessary in some cases for a deputy, attorney or a family member to apply to the Court for a Statutory Will, which is a Will made on behalf of someone lacking capacity. Even as a deputy or attorney you do not have the authority to create a Will for an incapacitated person without the prior approval of the Court of Protection. The Court will consider whether the creation of a Statutory Will is in the best interests of the incapacitous person.
What is a gift?
In regard to a deputy or attorney, a gift is described as transferring the ownership of money, property or possessions from the person whose affairs they manage to another (including themselves) without full payment in return.
The General Rule about Gifts
The general rule is that a deputy or attorney should not make gifts from the person's estate. However, there is an exception in which they may make a gift if it is to a family member, friend or acquaintance of the incapacitous person on a customary occasion, such as birthdays, Eid, Hanukkah, Diwali, Christmas or to a charity the person supported and the gift is not of an unreasonable value.
According to the guidance, any gift or transfer of a property, such as a house or land, is almost certainly outside of the deputy or attorney's powers. To make such a gift, the deputy or attorney would have to apply for permission from the Court of Protection,
A person's executed Will can be taken into account when making a gift, as it is a suggestion of the person's wishes.
Does the person have mental capacity?
The Mental Capacity Act 2005 (MCA) sets out how to assess capacity, which is a process containing several stages. To have capacity to make a decision, section 3 of the MCA says the person has to be able to:
- understand the information relevant to the decision;
- retain that information (hold on to it in their mind);
- weigh up or use that information; and
- communicate their decision.
If the person has mental capacity, they should make the decision to make a gift themselves. If the person lacks capacity, the deputy or attorney must still either consult them or encourage them to participate in the decision-making.
Providing for others' needs?
A deputy or attorney may potentially look after the needs of the person's relatives or dependents if legally obliged to maintain them.
In the case of The Public Guardian's Severance Applications (Rev1)  EWHC COP 10 (19 June 2017), the difference between a gift and a payment to meet a person's needs was considered. It was held that an LPA donor could legitimately require her attorney to meet her disabled daughter's needs from her estate without seeking authority from the Court of Protection, as this was meeting a need rather than making gifts.
What happens if you make unauthorised gifts?
If a deputy or attorney makes gifts beyond their authority and without approval from the Court of Protection, the OPG has the power to investigate and may apply to the Court of Protection to have the deputy or attorney removed; suspended temporarily; be required to apply for approval of the retrospective gift or return the gift. The OPG may also refer the matter to the police and can apply to the Court of Protection for a deputy's security bond to be called in and seek repayment personally from the deputy or attorney.
It is crucial that a person appoints people they trust to act as deputies or attorneys to manage their financial affairs when they lack capacity do so themselves.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.