New guidance on gifting from the Office of the Public Guardian
The Public Guardian has issued new guidance about gifting for someone acting as a deputy or attorney.
The important practice points are:
- A gift is not just buying a birthday present or giving money or possessions to somebody else. Gifts can also include donations to charity, paying someone’s school or university fees, living rent free or at a friends and family rate in a property belonging to the person, selling the person’s home to someone at less than market value, creating a trust for someone from a person’s property and giving someone an interest free loan from a person’s funds. In this case the lost interest counts as a gift.
- If the person you are deputy or attorney for has capacity to make a gift then they should make that decision. If you are not sure you should arrange a capacity assessment. A person is allowed to make an unwise decision.
- There is an important reminder that if you are a deputy or attorney, unless there is anything to the contrary, you are only able to make a gift:
- To a family member, friend or acquaintance of the person on a customary occasion
- To a charity
Of course, the Deputyship Order can extend the ability to gift. The wording “unless the power of attorney says otherwise” might confuse attorneys though. Section 12 of the Mental Capacity Act 2005 is clear that nothing in a Lasting Power of Attorney can give the attorney authority to make gifts beyond those above.
The practice note defines a customary occasion as for example, a birth, a birthday, wedding or civil partnership or an anniversary. It also includes occasions where families, friends or associates customarily give gifts such as Christmas, Eid, Diwali, Hanukkah or Chinese new year.
You will notice that the occasion of the end of the end of the tax year is not listed as a customary occasion!
Relations, friends and charities are defined as “such as a wife, brother or niece or someone connected with a person such as a friend or colleague”. When gifts are going to charity then they should be charities the person might have given to if they had mental capacity. A gift cannot go to a person or organisation unconnected to the gift giver.
The gift needs to be of reasonable value. Those giving gifts on behalf of somebody else need to ask what value of gifts the person used to give when they had mental capacity, how the gift will affect the person’s ability to meet their living expenses now or in the future, what the person’s life expectancy is and whether the gift reflects what the person has said they want to leave to people in their Will. Gifts must always be well within what the person can comfortably afford.
The note warns against gifts which might be a deprivation of assets for care fees purposes and reminds deputies and attorneys that if they want to go outside the scope of these gifts then they need to make an application to the Court of Protection.