The role of an attorney is not one to take lightly and often requires complex and difficult decisions to be made on the health, well-being and finances of a loved one. It is not surprising, therefore, that the rules governing attorneys are complex, and no more so than when making gifts.
There are two types of lasting powers of attorney (LPA). A health and welfare LPA gives those appointed as attorneys the authority to make decisions over a wide range of areas from medical care to living arrangements.
A property and financial LPA gives attorneys the power to make decisions over, as the name suggests, money and property, including access to bank and building society accounts allowing them to pay bills, collect pensions and even sell the family home.
It also allows an attorney to make gifts on the donor’s behalf.
What is a gift?
This might at first sound a simple question to answer, but a gift is surprisingly widely defined when considered through an LPA lens. A gift will, naturally, include those made to celebrate occasions such as weddings or birthdays, and are unlikely to cause attorneys any problems provided the gift is reasonable taking into account the size of the donor’s estate.
But a gift can also include allowing a family member or friend to live ‘rent-free’ in a property, selling a property below market value or transferring it to someone else, paying or contributing to school fees, providing an interest-free loan from donor funds or making charitable donations.
Gifts made by an attorney to themselves – the ‘he or she always wanted me to have it’ line – is not uncommon and can, perhaps understandably, create complications and leave an attorney open to allegations of financial mismanagement.
Making gifts
Where possible, the decision to make a gift should be taken directly by the donor as long as they have the mental capacity to do so. If an attorney is unsure whether they have that capacity, it is sensible to seek medical advice beforehand.
It is not uncommon for grandparents to pay or contribute towards the school fees of their grandchildren, and it is quite reasonable to expect those contributions to continue under an LPA. However, given the regularity and size of school fees, and even where there is a history of contributions, attorneys should tread carefully.
Attorneys cannot benefit personally from their position and paying school fees could create a position of conflict between the donor and attorney. Here – and in other instances where an attorney might benefit from a gift – it would be sensible to apply for approval from the Court of Protection.
Given the strict rules on gifting under an LPA, attorneys should obtain appropriate advice to determine whether the proposed gift would be allowable or whether prior consent of the Court of Protection should be obtained. Attorneys should also document all gifts made, including the value and reasons for those gifts, should they need to justify that decision to the Office of the Public Guardian.
Contact our Private Client Solicitors
If you are in need of advice or assistance on any of the legal issues mentioned in this article, please contact any member of our experienced Private Client team on 020 7631 4141 or email privateclient@bishopandsewell.co.uk
The above is accurate as at 02 January 2025. The information above may be subject to change.
The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.
