Legal News | 24.02.22
Making gifts with someone else’s money.
A Lasting Power of Attorney (“LPA”) is a powerful document. If a donor prepares a Property and Financial Affairs LPA and subsequently loses mental capacity, their attorney(s) will step into their shoes and start managing their finances. In this situation, there are strict rules on what an attorney can and cannot do.
When it comes to making gifts from a donor’s assets, attorneys are only allowed to make gifts on the donor’s behalf to the donor’s friends, family or acquaintances on customary occasions, such as weddings, birthdays and anniversaries. Attorneys may also make gifts to charities connected with the donor.
If a gift is made to a suitable recipient, it must be of ‘reasonable value’. The Government’s advice on gifts made by attorneys (or deputies) states that, when deciding if a gift is reasonable, you should ask yourself –
- did the person previously make gifts of this value when they had mental capacity?;
- would the gift affect the person’s ability to meet their living expenses, now and in the future?;
- what is the person’s life expectancy – and will they have enough funds for the remainder of their life?; and
- does the gift reflect what the person has said they want to leave to people in their will.
If the gift can be said to be (a) to someone connected with the donor or a charity they might normally give to, (b) made on a customary occasion and (c) be reasonable in value, then such a gift can be made without an application to the Court of Protection. However, if the answer is no to any of those questions, an attorney will need to seek permission from the Court of Protection before making the gift.
If you have any questions regarding gifting under a LPA, please get in touch with your usual Wansbroughs contact or email the Private Client team at firstname.lastname@example.org.