Making Gifts on behalf of the donor…

In the light of some recent judgments by the Court of Protection, the Office of the Public Guardian for England and Wales has updated its legal guidance for professional deputies and attorneys on making gifts of a protected person’s property.Screen Shot 2018-03-29 at 13.37.32

The basic rule

Attorneys can only make gifts on behalf of the donor:

  • in some limited situations, and
  • if it’s in the person’s best interests.

Donor’s capacity

Before making a gift, an attorney must consider whether the donor:

  • has mental capacity to understand the decision to make a gift, and
  • if they can take part in the decision.

If the donor has capacity to make a gift, then they should normally make the gift themselves, rather than tell the attorney to make it on their behalf.

If the attorney considers that the donor has capacity to make a gifting decision, they should keep a record of the steps they took to make sure they did.

However, the latest legal guidance goes on to say that even if the donor apparently has capacity to make a gift, the attorney must still use care and caution when the donor expresses a desire to make one. If a substantial gift is involved, the attorney may need to seek advice or arrange for a mental capacity assessment, or both.

If the donor lacks capacity then, as with all decisions an attorney makes, the main test is whether it is in the donor’s best interests.

The “best interests” test

A best interests decision is not the same as asking what the person would decide if they had capacity. You have to think about:

  • whether the person was in the habit of making gifts or loans of a particular size before they lost capacity
  • the person’s life expectancy
  • the possibility that the person will have to pay for care costs or care home fees in future
  • the amount of the gift – it should be affordable and no more than would be normal on a customary occasion or for a charitable donation
  • the extent to which any gifts might interfere with the inheritance of the person’s estate under his or her will, or without a will if one has to be created
  • the impact of inheritance tax on the person’s death.

What is a gift?

It is also important to remember that a gift is when you move ownership of money, property or possessions from the person whose affairs you manage to yourself or to other people, without full payment in return.

A gift can include:

  • making an interest free loan from the person’s funds, as the waived (dropped) interest counts as a gift
  • creating a trust of the person’s property
  • selling a property for less than its value
  • changing the will of someone who’s died by using a deed of variation to redirect or redistribute the person’s share in the estate (meaning someone’s property and money)

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