Where a person has lost the ability to manage his or her own financial affairs, you may be appointed to assist with making decisions about those financial affairs via a power of attorney (their attorney) or a deputyship order from the Court of Protection (their deputy).
If you are acting as an attorney or deputy, one question that you may need to consider is whether you are able to make gifts on behalf of the person for whom you have been appointed (referred to as P).
This is a subject that has recently been highlighted by Senior Judge Lush in a case in the Court of Protection (Re GM; MJ & JM v Public Guardian ) where deputies had made gifts amounting to some 56% of P’s estate, including gifts such as Rolex and Omega watches. Questions were raised as to whether the deputies were authorised to make these gifts on P’s behalf.
The Office of the Public Guardian has published a practice note which can be found on the Ministry of Justice website and which provides some guidance on how this issue should be approached, although it is still important to emphasise that it is simply guidance and there can be no generalised approach to the making of gifts. Each decision must be considered in its own context and timing and the overriding test will always be whether it is in P’s best interests.
What authority is there to make the gift?
If you are a deputy, you should consider the Court Order that appoints you as a deputy, check the terms carefully and seek advice from the Office of the Public Guardian or us, as your lawyers, for clarification of your powers if necessary.
Alternatively, you may be looking to make a gift under a power of attorney. So you will need to consider whether it is an enduring power of attorney or a lasting power of attorney and then consider the relevant sections of the Mental Capacity Act 2005. Again, this is something with which we can assist you and, indeed, if the power of attorney has not yet been registered with the Court of Protection, we can assist you with this as well.
Unless there are restrictions and/or conditions relating to the making of gifts in the power of attorney or Court Order, the usual position is that a deputy or attorney would be able to make gifts on customary occasions to relatives or persons connected to P or to make gifts to charities which P might have made provided that the value of the gift is not unreasonable having regard to all the circumstances and, in particular, the size of the estate. One should note that an attorney or deputy is not obliged to make gifts. If there are particular limitations to the type of gift that a deputy or attorney wishes to make, he or she should apply to the Court of Protection for express authority to make the gift in question, as mentioned below.
Is it a reasonable gift?
There is no definition in the Mental Capacity Act as to what is considered a reasonable or unreasonable gift. As an attorney or deputy, one is expected to decide how much is reasonable in the particular circumstances.
Some of the considerations to take into account when deciding whether or not to make a gift are as follows (although this is not an exhaustive list):
- The occasion of the gift – for example, is the gift for a customary occasion, such as a birthday, or to charity?
- The amount of the gift - for example, is the amount reasonable, affordable and in line with the sort of gift P used to make?
- P’s financial circumstances - for example, will P still have sufficient income to cover his or her usual expenditure?
- The recipient of the gift - for example, if the gift is to a family member, are all members of the family being treated equally, and if not, is there a good reason for this?
- Do you know the terms of P’s will? For example, if the terms of the will are known, this can be an indicator of P’s wishes, although this is not to say that the attorney or deputy should give away P’s assets in line with the provisions in the will in P’s lifetime.
Can P make the gift themselves?
The Court of Protection expects Attorneys and Deputies to use care and caution where P expresses a wish to make gifts and, as there is a specific legal test of capacity, it is advisable that you seek our advice for the steps to take to ensure that P has the capacity to make such a decision, especially where a substantial gift is proposed.
Applying to the Court of Protection
Where an attorney or deputy wishes to make a gift which they do not have authority to make under the terms of the deputyship order or the power of attorney, an application should be made to the Court of Protection for the appropriate authority. It is important to apply to the Court of Protection and not to the Public Guardian as the Public Guardian cannot approve a gift. A formal application should be made and we can to assist you with this.
Accountability to the Court of Protection
It is important to keep a record of any gifts made and the circumstances of such so you are in a position to give an account if asked and you should include details of gifts in any annual account that you submit to the Public Guardian.