Gifts in the Court of Protection for Deputies and Attorneys
The Court of Protection has recently decided that an Attorney appointed under a Lasting Power of Attorney was allowed to make gifts from the funds of his mother totalling over £7m. The reason provided by the Attorney was that he was wishing to reduce the Inheritance Tax liabilities of his mother.
Whilst gifts this size are rare, Attorneys and Deputies are entitled to make gifts on their own authority. These, however, are limited to seasonal gifts such as Christmas and birthdays and are generally expected to be modest in size.
Attorneys and Deputies can also make applications to the Court of Protection in order for their proposed gift to be approved by the Court. The Court will approach each application on the basis of the best interests of the person who lacks capacity.
In a recent case, the Applicant made a strong case from the outset that if the gifts were permitted and his mother survived a further three years, there would be significant Inheritance Tax savings for her on her death. The lady lacking capacity was 72 and sadly suffered from early onset dementia. She lived in a care home and her life expectancy was up to ten years. The lady without capacity had around £18.5m in assets and the Court determined that it was in her son’s best interests that the gift should be made.
The parties agreed that the Applicant had sought professional advice in relation to how best to secure his mother’s best interests prior to the application. The Attorney had received advice from a tax expert prior to making the application who suggested that making the application and the gifts would be a very positive thing for the lady who lacked capacity.
The Court noted the large amounts of assets that the lady had and the comparatively small gift in comparison. The Court noted that the future needs of the protected person must be considered on a cautious basis and the level of gifting must not put in doubt the Donor’s ability to meet her own needs.
The Court noted that tax mitigation was not something that could be assumed but the Court confirmed that every decision must be looked at individually in relation to best interests. The Court conducted a balancing exercise and decided that the gifts were in her best interests.
When looking to make gifts as a Deputy or Attorney, the Court of Protection made it clear in this case it is important to seek specialist advice. Any gifts over and above those normally provided at customary events such as birthdays require the approval of the Court of Protection in order that no criticism can be made of the Attorney or Deputy.