Gifting as an Attorney or Deputy

By Camilla Greenwood, solicitor and later life expert at Irwin Mitchell

Gifting as an Attorney or Deputy

When you've been entrusted to manage the financial affairs of someone who lacks mental capacity, a question we often get asked is whether making gifts of the donor's funds is allowed.

There are some key factors you should consider before making a gift on behalf of someone who lacks the mental capacity to agree. We've set out a best practice approach below:

What is classed as a gift?

It's necessary to understand what's considered to be a gift, as this isn't always obvious.

A gift can be any of the following (but isn't limited to):

• Donation to charity;
• Paying for school fees;
• Living in a property which belongs to the person who lacks mental capacity without paying rent;
• Selling their property for a reduced value;
• Creating a trust;
• Giving cash for a customary occasion;
• Spending the donors' money to benefit yourself; and
• Making an interest free loan.

The Mental Capacity Act 2005

It's your duty when acting as an Attorney or a Deputy to act in accordance with the principles outlined in the 2005 Mental Capacity Act.

Remember, you're not obliged to make gifts as an Attorney or Deputy - so thorough consideration must be given to whether it's appropriate to do so.

When you're considering making a gift, in accordance with the Act, you must try to consult the person whose finances you are managing.

If you find they're able to understand the decision to make the gift, weigh up the available information and communicate their decision; this isn't a decision which you, an Attorney or Deputy, ought to be making. 

Remember, an unwise decision doesn’t mean the donor doesn’t have capacity to make it. If you're unsure about whether the donor has the mental capacity to make the gift, you should consider whether a capacity assessment is required.

As is often the case with those who lack capacity, there can be certain times of the day where increased concentration is noticeable. You should always try to identify when a good time of day is and ensure that you have conversations relating to gifts at a time which is most beneficial to the donor.

Lack of mental capacity 

If you find that the donor does lack mental capacity to make a decision about a gift, as a Deputy or an Attorney you're allowed to give gifts on customary occasions. These include a wedding, anniversary, birthday, graduation, or civil partnership. Gifts can also be given at holidays like Christmas, Eid, Diwali, Hanukkah or Lunar New Year.

Affordability 

A gift must be reasonable. Looking at the overall financial situation of the person whose finances you are managing, ask yourself: can they afford the gift? Just because someone used to make generous gifts, are these still affordable today? Does the donor have to pay for care fees, mortgage payments or do they have other outgoings? 

Would they still be able to meet their contractual liabilities is this gift is made? Will their needs still be met financially after the payment of the gift? Have they made gifts in the past? Is the person receiving the gift a person to whom a gift would have previously been made by the donor?

What is considered reasonable will vary from person to person and you must be able to show that you have given consideration to the overall financial affairs before making a gift.

If you make a gift that the donor can't afford or it is of a substantial amount which may not be considered as “reasonable” you may find that the Office of the Public Guardian (OPG) will need you to:

• undergo an investigation of your management of the donor’s finances;
• pay back monies which you have gifted from the donor’s finances;
• make an application to the Court of Protection for retrospective approval of the gifts you have made. This can often be a lengthy and costly affair; and/or
• It may be found that you are not a suitable person to act as an Attorney or Deputy and you may be removed from you appointment. This would mean that you will no longer have control over the donor’s finances.

There's a lot to consider when making a gift if you are managing the financial affairs of someone who lacks mental capacity. 

If you are in any doubt about whether to make gift, you should seek expert advice from a later life specialist at Irwin Mitchell. We can offer affordable advisory services to an Attorney or Deputy and the fees are payable from the donor’s money.

What is considered reasonable will vary from person to person and you must be able to show that you have given consideration to the overall financial affairs before making a gift.”