You may be a deputy or attorney who is managing money on behalf of a person who lacks mental capacity but has more money than they need. In these circumstances, you may consider that the incapacitated person would want to make a gift.
The motivation of this gift may vary from inheritance tax planning to the provision of financial assistance for a close family member.
At the forefront of any decision made on behalf of the person who lacks mental capacity are the provisions set in the Mental Capacity Act 2005. The decision made must be in the best interests of the incapacitated person and that person should be consulted in respect of any decision made. It is clear from the Act that capacity is decision specific and must be held at the time the particular decision needs to be made.
Only when you are sure that the person cannot make the decision in question can the deputy or attorney decide for them.
Affordability must be one of the first considerations when deciding whether the proposed gift is proportional to the value of the estate. The deputy or attorney must consider the age of the person who lacks capacity, their current needs, their likely future needs and the resources they have available to draw upon for the rest of their lives. They must satisfy themselves that the person will still be able to meet all their needs for the rest of their life after the gift has been made and gifts must always be well within what that person can comfortably afford.
The attorneys and deputies should also consider the persons wishes, views and values and the views of the family members.
The deputy or attorney can make gifts without the Court of Protection’s approval if it is to a family member, friend, or acquaintance of the person, on a ‘customary occasion’ or to a charity and the gift must be reasonable given the size of the person’s estate.
If the gift does not fall into all of the above categories then you will need to make an application to the Court of Protection to approve the gift.
If you do not, and still make the gift then the Office of the Public Guardian might launch an investigation into your role as deputy or attorney, issue a warning to you and in the worst case scenario remove you as attorney /deputy.
The Office of the Public Guardian has recently produced a useful guidance note relating to gifts and in what circumstances the Court’s approval is required. However, a lay deputy or attorney may wish to seek professional advice when deciding whether to make a gift, with or without the Court of Protection’s approval.