Can I make a gift when acting under a Power of Attorney?

NOTE: This post is more than 12 months old, and the information contained within may no longer be accurate.

The simple answer to this question is ‘yes’ but there are limits as to who gifts can be made to and the amounts.

First of all it is important to consider what a gift is, this does not just comprise of giving the individuals money or possessions to another person. A gift can also include things such as allowing someone to live rent free at a property owned by the individual, donating to charity or paying someone’s school fees. This is list not exhaustive, there are many other situations where it could be considered a gift has been made.

If an individual has mental capacity they should be allowed to decide whether they wish to make the gift. If they haven’t got mental capacity but can sometimes make decisions, they should be involved in any decisions as much as possible.

If the individual is unable to make decisions, as an attorney, you have to believe that making the gift is in the individual’s best interests. Some areas to consider are:

  • What would the individual’s wishes and views have been?
  • What do family and friends think the individual may have wanted?
  • What are the current needs of the individual and will these likely change in the future? This would help decide whether the gift is affordable.
  • Is it possible the individual will regain mental capacity to then be able to make a decision for themselves?

Unless the Power of Attorney states otherwise gifts can be made to a family member or friend but this has to be on what is known as a ‘customary occasion’, as an example this would be a birthday, wedding or anniversary. Gifts can also be made to charities.

Once it has been decided that a gift is to be made the next important step is to decide whether it is of ‘reasonable value’. There is no set criteria as to how this can be established but some areas that could be considered are:

  • Did the individual give gifts whilst they had mental capacity and what were the values?
  • Would making the gift impact their ability to meet any current and ongoing expenditure?

It is important to remember the changing needs of the individual. A gift may be affordable now but if, for example, care needs change would the gift impact their ability to meet any increase in care fees in the future?

When making a gift the individual’s assets are reduced, this can not be done to avoid contributing to care costs, this is known as ‘deprivation of assets’. When conducting an assessment, the local authority may include assets that have been given away if it sees this as reducing the assets to avoid care costs.

If the gift does not meet the parameters of the Power of Attorney, an application can be made to the Court of Protection for authority to make the gift.

If a gift is made that is not permitted there may be an investigation which could result in a ‘warning’ and it is possible the gift will need to be returned. Under some circumstances the police could be alerted.

Acting as an attorney can be a stressful experience, there could be complicated situations to manage. These could range from managing the individual’s investments through to ensuring sufficient funds are available to pay any care fees.

As a Later Life specialist I have experience of dealing with Power of Attorneys and assisting people in making financial decisions. I have a variety of tools at my disposal which includes a comprehensive cashflow planning service, which, when considering whether to make a gift, this service can be invaluable in determining the affordability.

If you would like to discuss any elements covered in this article please contact me, I am happy to bear the cost of an initial meeting to discuss your options and establish whether I can help you.

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27 Oct 2023

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