| Financial services
Camilla Greenwood, solicitor and later life expert at Age Co's trusted Legal Services partner Irwin Mitchell, shares her best practice tips for gifting money as a Power of Attorney or Deputy.
An Attorney is appointed under a Lasting Power of Attorney (LPA) to look after someone’s affairs when they become mentally incapable. A Deputy is the person appointed by the Court of Protection to look after someone’s affairs if no Attorney has been appointed under a LPA.
When you've been entrusted to manage the financial affairs of someone who is affected by loss of mental capacity, a question we often get asked is whether making gifts or donations of their funds is allowed. The simple answer is yes, but there are some key factors you should consider before doing so. We've set out a best practice approach below:
It's necessary to understand what is legally considered to be a gift, as this isn't always obvious. A gift can be, but isn't limited to the following:
It is your duty when acting as an Attorney or a Deputy to do so in accordance with the principles outlined in the 2005 Mental Capacity Act, this includes acting in their best interests and taking the least restrictive intervention. When you're considering making a gift, in accordance with the Act, you must try to consult the person whose finances you are managing.
Remember, when it comes to gifting, you're not obliged as an Attorney or Deputy to make any – so serious thought must be given to whether it's appropriate to do so.
If as Attorney or Deputy you are asked to make a donation you feel is unwise, remember an unwise decision doesn’t mean the donor doesn’t have capacity to make it. Just because you wouldn't make that decision, disagree with it or think it's unwise, that doesn't mean you have the right to override their wishes. But you should review carefully whether they're in the right mental state to make the decision. If you're unsure about whether the donor has the mental capacity to make the gift, you should consider whether a capacity assessment is required.
As is often the case with those with compromised mental capacity, there can be certain times of the day where increased concentration is noticeable. You should always try to identify better moments of clarity and ensure that you have conversations relating to gifts at a time which is most beneficial to the donor.
If you find that the donor does lack mental capacity to make a decision about a gift, as a Deputy or an Attorney you're allowed to give gifts on customary occasions. These include a wedding, anniversary, birthday, graduation, or civil partnership. Gifts can also be given at holidays like Christmas, Eid, Diwali, Hanukkah or Lunar New Year.
A gift must be reasonable. Looking at the overall financial situation of the person whose finances you are managing, ask yourself: can they afford the gift? Just because someone used to make generous gifts, are these still affordable today? Does the donor have to pay for care fees, mortgage payments or do they have other outgoings?
Other questions to think about – would they still be able to meet their contractual liabilities if this gift is made? Will their needs still be met financially after the payment of the gift? Have they made gifts in the past? Is the person receiving the gift a person to whom a gift would have previously been made by the donor?
If you make a gift that the donor can't afford or it is of a substantial amount which may not be considered as “reasonable” the Office of the Public Guardian (OPG) could require you to:
If you are in any doubt about whether to make gift, you should seek expert advice from a later life specialist. To find out more about Irwin Mitchell Solicitors and our specialist services visit our Legal Services page.
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