We continue our look at the Guidance PN7 for Attorneys and Deputies making gifts on behalf of the Donor of the LPA/EPA or Deputyship Order. It is a bit dry, sorry, but it is important stuff.
The general rule is that the Attorney should not make gifts from the Donor’s assets, but there are exceptions.
Where the attorney is acting under an LPA, the gift must be all 3 of-
- Given on a customary occasion for gifts within families or friends and associates (eg births, birthdays, weddings, Christmas) and
- Given to someone related or connected to the Donor, to a charity the donor supported or might have supported and
- Be of reasonable value, taking into account the circumstances in each case and, in particular, the size of the Donor’s estate.
For attorneys acting under an EPA, the exceptions are similar but slightly narrower.
Attorneys must follow restrictions in the EPA or LPA. If an attorney wants to make a gift that falls outside the general exceptions or restrictions in the Power of Attorney, they must apply for Court approval. The Court may approve or decline the application.
For Deputies, the power to give gifts in the Deputyship order is normally similar to powers under LPAs.
What is reasonable?
The Attorney must consider the impact on the Donor’s financial situation, their current and future income, assets, capital and savings and their present and future needs. Does the Donor’s income cover their usual spending and will it continue to do so in the future considering the gift.
The Attorney must also consider whether the gift would be in the Donor’s best interests. This is not the same as asking what the Donor decide if they had capacity. So, for example
- Whether the donor was in the habit of making gifts or loans before they lost capacity
- The Donor’s life expectancy
- The possibility of care costs or home fees in the future
- Gift amount – it should be affordable and no more than would be normal on a customary occasion or for a charitable donation.
- Will gifts interfere with the inheritance of the Donor’s estate under his or her will? The Attorney must not upset the balance of gifts in their Will, but also, just because it is in their will does not mean you can give it away in their lifetime. and
- The impact of inheritance tax on the Donor’s death.