Making gifts on behalf of an incapacitated person

5th Nov, 2018 — Written by Helen Starkie

This can be a worrying topic for many Attorneys and Deputies.

Gifts can help preserve relationships with family and friends and may be made by the Attorney or Deputy, but only if they comply with their duties as defined in legislation and associated practice directions. Some decisions may be made without the consent of the Court of Protection; others will require the Attorney or deputy to apply for consent.

First, it is important to realise what may constitute a ‘gift’, for these are not limited to buying something for someone from the represented person’s funds or handing their money or possessions to a third party. Donations to charities, paying someone’s school or university fees, selling any property of the person at below market price, making an interest-free loan from the person’s funds, allowing someone to live in the person’s property rent free or at a below market rate – all these will constitute a ‘gift’.

Gifts of an appropriate size may be made on ‘customary occasions’ (birthdays, Christmas, a wedding or Christening, for example) and to a charity the person is known to support. They may not be made to third parties or organisations with which the person represented has no connection.

Even though the person represented may not have the capacity to fully manage their own affairs, they may have the capacity to decide whether to make the gift or not. If they have that capacity they must be allowed to decide. Mental capacity is the ability to make a particular decision at the time it needs to be made. This will include understanding whether the gift is of an appropriate size to the circumstances of its making, whether it is proportionate to the assets of the giver, whether the gift may, by depleting the assets of the giver, compromise the ability to make gifts to others etc., so there must be an ability to process information and give a reasoned decision.

If the person cannot make a decision themselves then the Attorney may assist them to do so and in the absence of any ability on the part of the giver they may make the decision for them, but in doing so they must have regard to the criteria listed above had the person made the gift themselves and also what family and friends think they would have wanted, the life expectancy of the person, the contents of their Will and whether the giver may regain capacity sufficiently to make their own decision. Crucially, when making any decision, the Attorney or Deputy must have regard to whether it is in the best interests of the person they represent – so an interest-free loan, for example, is unlikely to satisfy that criterion.

Gifts must be of a reasonable amount that the person can ‘comfortably afford’. If an Attorney or Deputy makes a gift that is not of a reasonable value then they could be breaking the law.

Attorneys and Deputies may not give away property in order to reduce the level of the person’s finances to a level which may qualify them for benefits or government help with care costs nor may they give away property to avoid the person having to contribute to current or future care costs. If they do the Local Authority is entitled to means-test the given as if they still owned the asset in question and may take action to recover the gifted asset or its value from its recipient.

If the proposed gift is to someone or a charity to whom the person might normally have given to, is on a ‘customary occasion’ and is of a reasonable size, given all the relevant circumstances, then no permission from the Court of Protection is needed to make it. Otherwise the consent of the Court must be obtained before the gift can be made.

If no such consent is obtained then there are various steps which the Court may take, including the removal of the Attorney or Deputy from office and arranging for him or her to repay what has been gifted. If in doubt check your position with your solicitor or the Office of the Public Guardian.

Helen Starkie (March 2018) Bath Life

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