It is a common misconception amongst lay Financial Deputies that their appointment confers on them the power to make unlimited gifts to themselves (or others), on behalf of the incapacitated adult (P). This is not the case. The earlier post of David Wedgwood (Limits on Deputies’ Spending), highlighted the fact that most Court of Protection Orders, appointing a Deputy, limit the amount of spending in any year, and authority will be required from the Court to exceed the limit.
When is the Court likely to consider such gifts to be reasonable?
The following factors are likely to be relevant when assessing whether the gift should be authorised:-
Is the gift made on a customary occasion? If the gift is given to celebrate the birth of a child, a marriage or civil partnership, or on someone’s birthday, it is more likely to be allowed, provided it is for a reasonable amount.
Is the gift made to persons who are related or connected to P, or to P him/herself? If it is, it is more likely to be allowed than if it is made to a third party unrelated to P.
Is the gift made to someone to whom P made or might have been expected to make gifts? For instance, this could include gifts to P’s children or grandchildren.
Other relevant factors include whether P was in the habit of making gifts or loans of a particular size, or nature, before they lost capacity. For instance, if P made regular charitable donations, it is likely to be reasonable for this to continue, provided it remains affordable.
Does the gift affect how the incapacitated adult’s estate will pass following their death? If P made a valid Will before losing capacity, and the gift frustrates the distribution of the estate, it is less likely to be authorised.
Was any attempt made to encourage P to participate in decision making, or obtain their views? If P was able to express a view and was in support of the gift, it is more likely to be sanctioned.
Is the gift reasonable, having regard to all of the circumstances, particularly the size of the estate? When assessing this, consideration has to be given to P’s current and anticipated income and capital, capital expenditure, debts, needs and life expectancy. The Deputy needs to be sure that P’s current and future needs (including care needs) can be met during P’s lifetime, if the gift is made. If in doubt, the Court will err on the side of caution, and refuse to authorise the gift.
- Above all else, the paramount consideration for the Court is whether the gift is in P’s best interests.
Sadly, the Court of Protection case law is littered with examples of Deputies having abused their position, by making unauthorised gifts to themselves, or people know to them, contrary to P’s best interests. This has included investing large sums of money in a business unrelated to P, or making substantial luxury gifts to relatives.
What options are available if there has been an abuse of power by a Deputy making unauthorised gifts?
The following options are available if there is a concern that the Deputy has abused their power, by making an inappropriate gift:-
- An application can be made to the Court of Protection to remove or replace the Deputy. A Panel Deputy will usually be appointed if there are no other suitable relatives.
- Steps can be taken to enforce the security bond, which is set up at the outset of the Deputyship.
- Compensation can be sought from the Deputy for any loss suffered to the estate.
- In order to ensure that the abusive Deputy does not benefit from their misconduct, consideration can be given to a Statutory Will being drawn up, to change how the estate will be distributed in the event of P’s death, thus redressing the balance.
If in doubt as to whether the making of a gift falls within the remit of the Deputy, authority should always be sought from the Court of Protection.