Gift Giving in the Court of Protection – helpful guidance issued by the OPG

When an individual is given the significant power of managing another person’s property and affairs – whether this is under a Deputyship order or an LPA – it is important that they do so with appropriate Court authority and within legislative boundaries.

The issue of deciding to gift another person’s money whilst acting as their Deputy or Attorney has for many years been the subject of interesting case law before the Court of Protection.

The guiding principle in these cases is that one should not make gifts from an incapacitated person’s estate except on ‘customary occasions’ to ‘someone related or connect to the person’ of ‘not unreasonable value’.

The Court of Protection can exercise its discretion on these matters and varying guidance has arisen within case law (often turning on specific factual circumstances) that has caused some confusion about the proper approach to these often-difficult decisions.

The Office of the Public Guardian (OPG) has recently issued a helpful practice note offering guidance to Deputies and Attorneys on how they might approach the issue of gift giving when exercising their powers, Click here to read more.

The overarching principle remains that any decision made on behalf on an incapacitated person should be undertaken in their best interests by considering the principles set out in s. 4 Mental Capacity Act 2005. One should also consider whether the person can take any active part in the decision-making process or indeed has capacity to understand the reasoning behind the proposed gift.

It is often erroneously thought that being appointed by the Court as Deputy, or as Attorney under an LPA, provides unrestricted decision-making authority. That is not the case. The OPG helpfully gives examples of gifts that would certainly require prior authority the Court of Protection. Those include:- making an interest free loan from the incapacitated person’s fund; selling a property at an undervalue or seeking to change the contents of a Will to favour a specific beneficiary in a manner contrary to that envisaged by the Testator at the time of drafting.

Whilst Attorneys acting under an LPA must have regard to the terms of the power appointing them, it should be noted that the power given under an LPA must ‘only restrict the powers the law gives attorneys’ as opposed to expanding those powers. In practice, this means that if an LPA is drafted broadly so as to purport giving the attorney wide discretion to make significant gifts from a person’s fund, that specific provision within the LPA is likely to fail. An example of a provision that could fail might be “I give my Attorney authority to make gifts of up to £50,000 per annum from my assets in any manner or to whom he feels is appropriate”.

If a Deputy is proposing to pay a family member for the care that they are providing to an incapacitated individual, then authority for making such payments should in most cases be sought from the Court. These payments might be regarded as a gift if not property disclosed or authorised. Professional Deputies have a wide discretion to agree payments for care, but lay Deputies should seek advice and Court approval before committing to any such arrangements.

The OPG rightly reminds Deputies to exercise caution if they are contemplating making a gift over to themselves from the incapacitated person’s fund. It is important that Deputies and Attorneys do not breach their fiduciary duty or take advantage of the position to which they have been appointed.

If a Deputy or Attorney makes any unauthorised gifts they might be subject to investigation by the OPG. Where the contravention of authority is serious, the police might be asked to investigate the conduct because as highlighted by the OPG “fraud by abuse of position is a criminal offence under section 4 of the Fraud Act 2006”. If you are a Deputy or an Attorney affected by any of these issues please contact Alexandra Knipe at Anthony Gold Solicitors for further advice.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*