Deputy Gifting – making gifts out of surplus income

The recent case of FL v MJL [2019] EWCOP 31 looked at the authority of a deputy to make gifts from the surplus income of the person whose funds he manages. MJL is a very wealthy individual with wealth of around £17,000,000 resulting in an income in the region of £123,000 but the court’s decision provides useful guidance whatever the assets or income of the person concerned.

The family in this case had asked for permission to make more extensive gifts from MJL’s capital but the Court did not allow this. It did allow that gifts could be made out of the extra income that MJL had each year that he did not need for his own personal expenditure. The Court ordered that the gifts are to be paid in similar proportions to the division of MJL’s estate in his will, to ensure that there is fairness between the family and the charities named in the will.

In this case the gifts were to help plan to minimise the inheritance tax that would be due following MJL’s death. There is a huge range of reasons that a deputy or attorney may consider making gifts, either from capital or from excess income. It is important to keep in mind that a deputy (or an attorney) has very limited authority to make gifts without the Court’s approval. Any deputy or attorney who is thinking about making gifts from the assets of the person whose money they look after would be wise to take properly qualified legal advice.

The Court of Protection makes decisions about gifting based upon the best interests of the person whose money it is. The factors that will be looked at include how much capital they have, their income, financial needs, life expectancy, attitude to gifting, previous decisions made about financial planning before they lost capacity and also family circumstances. Each case is looked at individually. A case like this really helps to show how the Court approaches these applications and this can help a deputy or attorney decide if it is appropriate for them and the person they act for.