Public Guardian issues updated guidance on gifting for attorneys & deputies

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Elderly ClientsTo gift or not to gift… A dilemma often faced by an individual’s (“P”) attorney/deputy.

Pressure to gift P’s assets can result from the financial difficulties of P’s friends and family, a wish to save inheritance tax, misguided attempts to avoid paying for long term care fees or even directly from P.  An attorney/deputy considering the making of such gifts must tread very carefully.

Over the years the Court has asked us to replace many attorneys/deputies who have fallen foul of the rules. We have also helped many attorneys/deputies to successfully obtain retrospective approval of their actions but this is often a complicated and expensive procedure.

The Office of the Public Guardian (“the OPG”) has now issued renewed guidance to assist attorneys and deputies evaluate their authority to make gifts. The guidance can be found on the OPG’s news page at https://www.gov.uk/government/news/opg-updates-legal-guidance-on-giving-gifts.

The role of attorney/deputy is demanding, varied and often complex, more so than most people realise.  It certainly isn’t something which should be accepted lightly. As such, we would encourage all attorneys and deputies to familiarise themselves with any guidance issued by the OPG and to take legal advice whenever in doubt.

Can attorneys and deputies make gifts on P’s behalf?

Only in very limited circumstances, as a set out in the OPG’s guidance note.

The rules on gifting differ slightly depending upon whether you are acting under an Enduring Power of Attorney, Lasting Power of Attorney or Deputyship Order.

Generally, gifts can only be made:

  • On customary occasions (e.g. births, birthdays, family celebrations such as Christmas, Eid, Diwali, Hanukkah, Chinese New Year, marriages and civil partnerships);
  • To relatives or persons connected to P (e.g. a friend or someone whom P has benefited in the past);
  • To a charity that P supported or might have supported; and
  • Provided the gift is of reasonable value taking to account P’s circumstances, particularly the size of P’s estate.

What is a “gift”?

A gift is not necessarily limited to the giving of cash. Gifts also extend to the following:

  • Transferring ownership of P’s property
  • Giving away P’ possessions
  • Creating a trust of P’s property
  • Selling P’s property for less than full value
  • Making an interest free loan from P’s funds
  • Redirecting P’s share in a deceased’s estate by deed of variation
  • Using P’s funds to pay education fees

Any of the above gifts (i.e. anything other than modest cash gifts) must have the approval of the Court of Protection before they are made.

Paying a relative or connected party to care for P could also constitute a gift if done without authorisation from the Court of Protection. Guidance on this particular issue is beyond the scope of this note.

Deciding whether to make a gift

If P has mental capacity then it is P who should decide whether or not a gift should be made. Mental capacity is issue and decision-specific and attorneys and deputies are expected to take all reasonable steps to involve P in the decision making process. More information on assessing capacity can be found in the Mental Capacity Act Code of Practice.  If there is any doubt at all then it is prudent to obtain contemporaneous medical or legal opinion to avoid future embarrassment and costs for any well-meaning attorney or deputy who may assist in the mechanics of the gifting process.

Where P lacks mental capacity to decide whether or not to make a gift, their attorney/deputy may be able to make that decision for them. There are specific “de minimis” (meaning of minimal amount) exceptions where a Court application is not required but we would recommend that you speak with us first to check whether these exceptions apply to your specific circumstances. If you intend to make a gift which exceeds your limited authority as attorney/deputy, then an application to the Court of Protection will be needed before the gift is made.

Whether it is the Court or the attorney/deputy (under the de minimis exceptions) making the decision, it must be made in P’s best interests. In deciding whether a gift is in P’s best interests, the following is a non-exhaustive list of factors which would need to be considered:

  • P’s previous gifting history (i.e. before their mental incapacity)
  • The value of P’s estate
  • Demands upon P’s funds (e.g. care costs and likely eligibility for non-means tested NHS funding)
  • P’s life expectancy
  • Affordability of the gift (e.g. the gift shouldn’t be more than P would usually give)
  • P’s testamentary wishes (e.g. does the gift conflict with anything in P’s Will)
  • The likely impact of inheritance upon P’s estate

What should I do if I think I may have exceeded my authority?

Speak to us! We’re here to help!

Obtaining independent legal advice at the earliest opportunity can often be essential to positively resolving matters in P’s best interests.

We are very experienced in assisting attorneys and deputies in this process. It’s never an easy experience as it almost inevitably involves the scrutiny of the OPG, the Official Solicitor (appointed to represent P’s interests in the matter) and the Court of Protection. Indeed, the Court of Protection understandably takes a dim view on those exceeding their authority / those placing their interests in conflict with P’s interests.

Common scenarios where an attorney/deputy exceeds their authority or places themselves in conflict involve, but are not limited to, the following:

  • accepting substantial cash gifts;
  • transferring ownership of P’s property;
  • using P’s funds to invest in the family business;
  • tax planning through gifts and investments without the Court’s prior approval; and
  • using P’s funds to make loans.

It is not uncommon for the Court of Protection to remove attorneys and deputies from their role when they have exceeded their authority. This can lead to significant legal costs for P in the ensuing court proceedings, and in the future costs of a professional/OPG panel deputy being appointed as a replacement. For the attorney/deputy it can mean personal civil liability or even criminal proceedings, particularly where they have personally benefited from the gifting.

As such, it is essential to obtain advice before making any gifts in your capacity as attorney/deputy. If the gift has already been made, then we would recommend seeking advice as early as possible if you are to have any chance of resolving the matter in P’s best interests with proportionate cost for all parties.