An attorney is someone appointed by a Power of Attorney to make decisions on another individual’s behalf. These can be financial decisions or decisions about health and welfare. The most common type of powers of attorney are called Lasting Powers of Attorney (LPA).
The rules about making gifts out of someone’s funds are limited, so it is key that attorneys understand the scope of their powers before acting.
In law, an attorney acting under a property and financial affairs LPA can make gifts on “customary occasions” – for example birthdays or Christmas. Such gifts must either be to someone connected with the person whose money is being gifted, or to any charity which he or she made or might have been expected to make gifts. When it comes to the size of any such gift, it must be ‘not unreasonable, having regard to all of the circumstances, and in particular the size of the individual’s estate’.
In addition, LPAs often include express wording indicating that the attorney may use the individual’s funds to make gifts. The wording used for these expressions varies widely. Therefore, the Office of the Public Guardian (OPG) has recently bought a group of test cases, which have resulted in a series of clear rules that persons appointed as attorneys in England & Wales can use when deciding whether they can make gifts.
If an attorney wishes to make a gift that does not fall within the limitations imposed by law or the LPA itself, he or she will need to make an application to the Court of Protection for authority to do so.
If an attorney has made any authorised gifts, the OPG has a wide range of powers to investigate. If the person whose money was gifted dies, the value of the gifts will still be treated by the Revenue as being within the estate for inheritance tax purposes.
If would like any further information about the scope of your powers to make gifts when acting as an attorney, please do not hesitate to contact me at [email protected].