Stephanie Cooper

01223 785287 secooper@greenwoodsgrm.co.uk

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‘Tis the season to be jolly? The gifting rules for attorneys.

Wealth Preservation / 12 November 2021

A Financial Decisions Lasting Power of Attorney (‘LPA’) allows a person (the donor) to grant another person (the attorney) authority to manage their financial  affairs on their behalf. Appointed attorneys may want to use the donor’s finances to make gifts for various reasons, and the fast-approaching festive season brings to light the rules surrounding gifting. It can be difficult and time-consuming for attorneys to navigate this period correctly.

When someone has made an LPA but is still capable of making their own decisions, they will always decide whether they would like to make a gift.

Where capacity is uncertain, attorneys should establish a clear understanding of the donor’s ability to make decisions before they consider gifting or assisting with gifting. Attorneys should consider several factors in ascertaining capacity, since the Office of the Public Guardian (OPG) has a protective role and can ask for evidence of what steps were taken. Therefore, attorneys should consider factors like:

  • whether the donor understands the value of the gift;
  • whether loss of capacity is permanent or temporary and if temporary, whether the decision can wait until capacity returns;
  • if the donor appreciates who the gift is being made to; and
  • the extent the donor can communicate their decisions.

When someone is unable to make decisions for themselves, attorneys have limited gift-giving abilities. Gifts should be reasonable and affordable for the size of the estate and made on a customary occasion if the gift recipient is a family member or a close friend. Customary occasions include birthdays, weddings, and anniversaries, as well as religious holidays such as Christmas, Diwali, or Eid. This is not always straightforward and key considerations include the donor’s wishes and established historical patterns of gift-giving. For larger gifts, attorneys should obtain consent from the Court, and there are repercussions if large unauthorised gifts are made. Attorneys may also make gifts of a reasonable amount to previously supported charities where the LPA expressly allows it.

As some attorneys will know, it can be a demanding time to manage another’s financial affairs and it is vital that mistakes are not made. If you are an attorney who has concerns about gifting, it is important to seek legal advice.

 

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This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. This update relates to the prevailing circumstances at the date of its original publication and may not have been updated to reflect subsequent developments. If you have general queries about our updates, please email: mailinglists@greenwoodsgrm.co.uk

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