The Office of the Public Guardian has published new guidance for how deputies and attorneys should approach giving gifts on behalf of the person they act for.
We often recommend that people put in place a Lasting Power of Attorney, in case they lose mental capacity in the future.
These legal documents allow you to appoint someone, called an attorney, to make important financial decisions on your behalf; this can cover property and financial affairs, and health and welfare decisions.
If a Lasting Power of Attorney isn’t in place, the Court of Protection can appoint a deputy to make decisions for you, should you lose the capacity to make these decisions for yourself.
When acting as a deputy or attorney, there is clear guidance to follow to make sure you are acting in the best interests of the person you act for.
This new detailed guidance from the Office of the Public Guardian confirms the strict-rules on making gifts when acting as a deputy or attorney.
The OPG explains that deciding whether to make a gift is an important part of being a deputy or attorney. Gifts can help to preserve the relationships with the family and friends of the person whose finances you are helping to look after.
However, deputies and attorneys need to be aware of the strict rules on gift-making. As a deputy or attorney you have limited powers to make gifts on the person’s behalf and you may need to seek the authority of the Court of Protection when you do.
Attorneys acting under an Lasting Power of Attorney and deputies appointed by the Court of Protection have broadly similar duties when making decisions about gifting under either the Mental Capacity Act 2005 (‘the act’) or their deputyship order, or both. Attorneys acting under EPAs have similar but not identical duties.
Before making a gift, you must consider whether the person:
-has mental capacity to understand the decision to give a gift
-can take part in the decision
There is no single approach to gifts that applies to every deputy and attorney. Attorneys and deputies have to make each decision considering its own context and timing.
As with all decisions a deputy or attorney makes, the main test is whether it is in the person’s best interests.
The law says you have to act in the person’s best interests. You work out best interests on each occasion, taking into account all the relevant circumstances. In particular, you must follow the steps outlined in section 4 of the act.
Attorneys must also follow the terms (instructions) of the specific EPA or LPA they are acting under.
A gift can include:
-making an interest free loan from the person’s funds, as the waived (dropped) interest counts as a gift
-creating a trust of the person’s property
-selling a property for less than its value
-changing the will of someone who’s died by using a deed of variation to redirect or redistribute the person’s share in the estate (meaning someone’s property and money)
For any of these steps, you need to apply to the Court of Protection before you go ahead. The Court of Protection has the power to either approve or refuse your application.
OPG produces a very readable general guide to gifting for deputies and attorneys.
The new detailed guidance is also a useful read.
Something we can help with, as Chartered Financial Planners with a specialism in care fees planning, is helping attorneys and deputies determine what is a ‘reasonable’ gift.
The Mental Capacity Act 2005 does not define what is a ‘reasonable’ or ‘unreasonable’ gift when it comes to assessing whether a proposed gift is within the authority of an attorney or deputy to give.
Working with an attorney or deputy, we can help determine the impact of the proposed gift on the person’s financial situation.
This allows the attorney or deputy to consider not only their current and future income, assets, capital and savings but also their present and future needs.
Part of this decision making is to consider whether their income covers their usual spending and will continue to do so in the future – and whether the gift would affect that.
Do get in touch if you have financial decisions to make relating to the care fees planning of a friend or relative.
