The Christmas season often inspires generosity, where you may look forward to giving gifts to your loved ones as an important holiday tradition. However, when acting as an Attorney or a Deputy for someone who lacks mental capacity to manage their own property and finances, you need to be aware that you have limited powers to make gifts on their behalf.
In this blog, we will explore what you should keep in mind when considering Christmas gifting in your capacity as an Attorney or Deputy.
Does ‘P’ / the ‘Donor’ have capacity to decide to make the gift themselves?
When you are considering whether to give a gift on behalf of an individual, i.e. the ‘Protected Party’ (also known as ‘P’ if they are subject to a Deputyship, or the ‘Donor’ if they have an Attorney acting on their behalf), it is important to always consider whether they have capacity to make that decision themselves.
Whether an individual has capacity depends on the specific decision, and their ability to understand, retain, weigh and communicate that decision. The fact that an individual lacks capacity to manage their financial affairs independently does not necessarily mean that they also lack capacity to decide to make a gift.
If a person has capacity in respect of gifting, they should be able to do so. However, it is important that you keep a record of the steps you took, as the Office of the Public Guardian (OPG) may ask you at any point to explain the circumstances and your decision. If you are a Deputy, it will also need to be declared in your annual report to the OPG. However, best practice would be to notify the OPG when the decision is made, rather than waiting until the annual report is due particularly if it is a gift out of the ‘ordinary’.
Where there are concerns about capacity, it is always wise to obtain an independent capacity assessment or seek legal advice. This is particularly the case if the gift is substantial, out of the ordinary or does not appear proportionate when considering the person’s estate.
Gifting as an Attorney vs Deputy
If you are sure that ‘P’ / the ‘Donor’ does not have capacity to make the gift, in certain circumstances you may be allowed to make the gift yourself from their funds.
Attorneys and Deputies have broadly similar duties when considering whether to make a gift on behalf of an individual.
In short, Attorneys and Deputies may be permitted to make a gift if it is made:
- On a customary occasion (for LPA Attorneys or Deputies) or of a seasonal nature (EPA Attorneys), for example at Christmas or other religious holidays, birthdays, or marriage / civil partnership anniversaries; or
- To someone who is related or connected to the individual, such as their family or close friends; plus
- Is not an ‘unreasonable’ value, with regard to the circumstances of the gift and the size of the person’s estate.
Any other types of gifts will need to be authorised following an application to the Court of Protection.
What is a ‘reasonable’ gift?
There is no set definition of a ‘reasonable’ or ‘unreasonable’ gift, and the final decision on reasonableness will be your decision, as Attorney or Deputy.
All gifts that you make must be in the financial best interests of the ‘Protected Party’. It is important that you consider the impact of the gift on their overall finances, including the impact of the gift on both their current and future estate, but also their present and future needs, such as their care needs.
Small, low-value Christmas gifts which will not influence the total value of the ‘Protected Party’s’ estate may be deemed reasonable. However, it is important to remember that any loans, gifts of property, or gifts that are valuable or expensive should be authorised by the Court of Protection.
Important considerations when making a gift on behalf of a ‘Protected Party’:
For Attorneys, it is important to check the wording of your Lasting Power of Attorney or Enduring Power of Attorney to ensure that it does not specifically restrict your powers to make gifts.
For Deputies, most Court of Protection deputyship orders confer a ‘general authority’ to manage the individual’s financial affairs, but you should check the wording of your Order to ensure that you have the authority to make gifts.
Further guidance on giving gifts as an Attorney or Deputy when managing the property and financial affairs of an individual who lacks capacity can be found in the OPG Guidance: ‘Giving Gifts’ (Giving gifts (web version) – GOV.UK).
For more information or advice, please contact our Court of Protection team on 0344 3260049 or email [email protected].