Making gifts under an LPA
Are you an attorney under a Property and Financial Affairs LPA? With Christmas upon us it is important to understand what authority you have as an attorney to make gifts on behalf of the donor at this time.
Under section 12 of the Mental Capacity Act 2005 an attorney may dispose of the donor’s property by making gifts in the following circumstances:
(2) the Donee may make gifts –
(a) on customary occasions to persons (including the attorney) who are related to or connected with the donor; or
(b) to any charity to which the donor made or might have been expected to make gifts.
The value of the gift must not be unreasonable in all of the circumstances, and many factors will be taken into account to determine what is reasonable, amongst them the size of the donor’s estate.
Section 12(3) defines ‘customary occasions’ as:
(a) the occasion or anniversary of a birth, a marriage or the formation of a civil partnership; or
(b) any other occasion when presents are customarily given within families, or among friends and associates.
A gift to an individual must be made at a ‘customary occasion’ which by the definition above includes Christmas, a time where the donor would ordinarily be expected to exchange gifts with family and friends.
When making gifts to individuals on behalf of the donor at Christmas you must consider the following:
- Is the individual receiving the gift connected to the donor? Are they a relative or a close friend?
- Is the gift taking place at an appropriate time? There should be no problem here as the gift is of a seasonal nature.
- Finally, is the value of the gift not unreasonable in all the circumstances?
Under section 23(4) the Court of Protection may also authorise the making of gifts that are not covered by section 12(2), such as larger gifts or gifts made for inheritance tax planning purposes