“Gifting” As A Deputy Or Attorney: The Rights & Wrongs
Caroline Philcox
Being a Deputy or Attorney can cause difficulties if you find yourself having to wear different hats: the first as the relative of the incapacitated person and the second as protector of that relative’s assets.
Take for example the situation where your mother loses mental capacity and you act either as her Attorney under an Enduring Power of Attorney or Lasting Power of Attorney or, in the absence of such a document, you have successfully applied to the Court of Protection to act as your mother’s Deputy. You may find yourself having to weigh up your responsibilities to her as her Attorney against what you consider she would have wanted to happen to her assets before she became incapacitated.
Let’s say your daughter needs help towards a deposit on her first flat. She needs £8,000 to make up the shortfall. You don’t have the money and you know your mother would have been the first to help her. But your mother no longer has capacity and the responsibility rests with you. As Attorney, are you allowed to gift that amount in your mother’s name? Will Social Services consider this gift to be a deprivation of assets if your mother needs funding for her care in the future yet no longer has assets of her own to pay for that care?
As Attorney or Deputy, you have a number of duties and you must always act in line with the powers granted to you on the LPA document or Deputy appointment. For example, the LPA form highlights five specific Attorney responsibilities, one of which is “I can spend money to make gifts but only to charities or on customary occasions and for reasonable amounts”.
Many clients tell us that they have heard that as Attorney, they are automatically entitled to make gifts to family members in line with the annual Inheritance Tax allowances, but this is not in fact automatically correct and the incapacitated person’s individual circumstances, needs and finances must be taken in to account. Furthermore, in many cases, a gift must be approved in advance by the Court of Protection.
Senior Judge Lush
Some clear guidance has now come our way by way of a judgment from the Court of Protection. In Re GM: MJ & JM v Public Guardian [2013], Deputies had made gifts to themselves and other family members and charities totalling around £230,000, about half of the family member’s wealth, without consulting her. One of the Deputies gave themselves £20,000 in cash, an Alexander McQueen designer handbag, a Rolex watch, a ring and gifts to the other Deputy worth more than £48,000. Senior Judge Lush listed the considerations that should be taken into account when a Deputy is making a gift:
- (i) having regard to the patient’s financial position
- (ii) the extent to which the patient was in the habit of making gifts of a particular size or nature; &
- (iii) the possibility that the patient may require future residential or nursing care, among others
Senior Judge Lush was unequivocal in his condemnation of their actions and stripped them of their Deputyships:
“The applicants … have applied to the court for the retrospective approval of a number of gifts they have made from GM’s funds to themselves, their families, some friends and several charities, and also for the court to agree what they have described as their Deputyship expenses. … I have no hesitation in revoking their appointment as Deputies. GM’s finances are in disarray because of their conduct, and it is in her best interests that someone with experience of cases of unjust enrichment and restitution, such as a panel Deputy, is appointed to manage her affairs in their place.”
The subject of gifting is a complex one, and while this example is an extreme one, what has been confirmed from this judgment is that Attorneys and Deputies cannot gift at whim and at will, but that the best interests of the incapacitated person remain paramount.
