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The complexities of an Attorney giving gifts when an LPA is in place…

When a person is asked by a loved one to act as an Attorney under a Lasting Power of Attorney (LPA) most do not hesitate to oblige. Being invited by someone you love to hold such a responsible position in the event they lose mental capacity is usually an honour. However, few people realise that by agreeing to be an Attorney, they risk opening themselves up to a possible investigation by the Office of the Public Guardian (OPG). And one of the most common reasons for the OPG to be alerted is regarding gifts made when there is an LPA in place.

Consider the following scenario – Jenny is suffering from dementia and has created an LPA appointing her daughter, Kate as her Attorney. It is Kate’s son’s birthday and Kate would like him to receive a present from Nana. So, using her authority as an Attorney, and without consulting Jenny, she uses Jenny’s money to buy her son a £400 PS5. Kate’s brother is unhappy with this gift as in the past, Jenny only spent around £50 on gifts for her grandchildren. He believes that Kate is acting in her own interests rather than Jenny’s and makes a complaint to the OPG.

OPG investigations are intrusive and stressful. Therefore, it is imperative to understand the laws surrounding gifts made by an Attorney on behalf of the LPA creator (known as the Donor).

How is a gift defined when an LPA is in place?

If an LPA is in place, the definition of a ‘gift’ is broader than simply giving a present of money or a thing (such as a book, plant, car etc). The OPG also classifies the following as gifts:

  • donations to charities
  • paying someone’s school or university fees
  • living rent-free or at a ‘friends and family’ rate in a property belonging to the Donor
  • selling the Donor’s home to someone at less than market value
  • creating a trust for someone from the Donor’s property
  • giving someone an interest-free loan from the Donor’s funds (the ‘lost’ interest counts as a gift)

What are the rules around Attorney’s making gifts when a financial LPA is in place?

If the Donor has the capacity to decide on a particular matter, an Attorney should not make a decision relating to that matter unless the Attorney is acting (and the Donor is aware of this) under a financial LPA that authorises the Attorney to act while the Donor has capacity. Therefore, if the LPA does not provide any authority for making a gift, not only must you, as an Attorney, have a reasonable belief that the Donor does not have the mental capacity to decide on making a gift, you must also take reasonable steps to help the Donor make an independent decision. This could include providing all the information required to decide, including details on the foreseeable consequences of making the gift. You should also consider whether there is a particular time of day the Donor is more lucid and whether using simple language and pictures may assist with the Donor’s understanding. It is also worth considering delaying making the gift until such a time that circumstances are more conducive to the Donor’s ability to decide for themselves.

Under section 4(6)(a) of the Mental Capacity Act 2005, you should consider the Donor’s past and present wishes and behaviour when making gifts and examine the LPA closely for any guidance related to making decisions.

Remember, just because the Donor makes an unwise decision, this does not legally mean they lack mental capacity. Although you may believe you are protecting your loved one from making a mistake, you must seek legal advice on whether the Donor has the capacity to decide on the relevant issue. You may believe that your parent is daft to hand over shares of the family business to your wayward, spendthrift sibling, but if they have mental capacity, they are perfectly entitled to make their own errors.

Who can I give gifts to?

Unless the LPA states otherwise, you can only make gifts to:

  • a family member, friend, or acquaintance of the person on a ‘customary occasion’
  • a charity

A ‘customary occasion’ is defined as a birthday, Christening, wedding, anniversary etc.  It also includes occasions where it is custom for the Donor’s friends and family to give gifts, for example, Christmas, Eid, Diwali, Hanukkah, or Chinese New Year.

All gifts must be of reasonable value with regards to the amount of money and property the Donor has.

Final words

Giving gifts outside the power granted to you by the LPA or the legal guidance above may result in serious consequences. The OPG may give you a warning, ask you to pay back the money or return the gifts, and in the most serious of cases, apply to the Court of Protection to have you removed as an Attorney and/or alert the police.

If you have any uncertainties around making a gift as an Attorney, seek legal advice. In this type of situation, it is far better to be safe than sorry.

For more information about any of the points made in this article, please contact Lucy Thomas on 01243 216901 or email her at lucy.thomas@legalmatters.co.uk.

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