Can an attorney or deputy make gifts on behalf of a donor?

The Court of Protection and the Office of the Public Guardian protect people in England and Wales who, due to mental incapacity, may not be able to make decisions themselves about their health and financial matters. A Lasting Power of Attorney or a Deputyship Order are the two main types of legal documents that enable another individual (an Attorney or Deputy) to make decisions on your behalf.

Attorneys and Deputies are governed by the Mental Capacity Act 2005 and its Code of Practice. If they wish to do something which is not authorised in the document appointing them or by law, then they must apply to the Court of Protection for consent to do so.

A regular question is ‘Can an Attorney or Deputy make gifts on behalf of the person lacking capacity?’. The general rule is that, with some exceptions, an Attorney or a Deputy is not allowed to make gifts from the person’s estate.

The rules on making gifts are strict and designed to protect the person’s best interests. The starting point for all Attorneys and Deputies is to determine if the person has the mental capacity to decide for themselves whether or not the gift should be made. If the person does not have capacity to make the decision, the Attorney or Deputy can only authorise a gift if all three of the following are met:

• the gift is given on a customary occasion within the family or among friends or associates. A customary occasion includes births, weddings, birthdays, Christmas or other religious holidays;
• the gift must be to someone related or connected to the person, having particular regard to whether the person was in the habit of making gifts before they lost capacity; and
• the gift must be a reasonable value, taking into account the size of the person’s estate.

If one or more of the above points are not met, the Attorney or Deputy must apply to the Court of Protection for authorisation to make the gift. The Court of Protection will consider the request carefully, taking into account factors such as the person’s life expectancy, the size and nature of their estate and whether the person’s estate will be liable for Inheritance Tax.

If you are an Attorney or a Deputy and would like some advice on whether you can authorise a gift, please contact Megan Stocks below.