Making gifts when acting as an Attorney or Deputy
If you are an Attorney acting under an Enduring Power of Attorney (EPA) or a Lasting Power of Attorney (LPA), or a Deputy acting under a Court Deputyship Order, you may need to consider inheritance tax planning for the person you are acting for.
It is not unusual for someone to take steps during their lifetime to reduce their exposure to inheritance tax on their death, often by making lifetime gifts to close family members or by investing in tax efficient financial products or by redirecting inheritance over to a child or grandchild. If someone has lost mental capacity, then this is not something they would be able to consider themselves but an Attorney or Deputy could potentially explore opportunities available on their behalf.
Tax planning or the making of gifts is restricted for Attorneys and Deputies. Making a decision on whether to make a gift when acting as an Attorney or Deputy can be an important part of your role and there are strict guidelines issued by the Office of the Public Guardian which you must follow.
The general rule is that Attorneys and Deputies cannot make gifts from the Donor's (person you are acting on behalf of) estate, however there are some exceptions to this rule. The exceptions are slightly different depending on whether you are acting under a LPA or an EPA.
You need to ensure you are not exceeding your authority by making decisions which may leave you open to criticism for abusing your position or potentially facing criminal charges. If you make a gift without the permission of the Court of Protection you may be investigated and could end up being removed as an Attorney or Deputy and potentially being prosecuted for abuse of your position.
If you are contemplating making a gift in your capacity as a Deputy or Attorney, we recommend that you seek advice to ensure that you do not exceed your authority. You may have a valid reason for why you think it would be a good idea for the person to make a gift, (i.e. tax planning) but you must apply to the Court of Protection for authorisation. This is often referred to as making an application for a 'Statutory Gift'.
At Band Hatton Button, we regularly advise our Attorney and Deputy clients on making applications to the Court of Protection.
For individual advice and assistance contact our Wills, Probate and Trusts Team to find out how we can help.
Charlotte Macalister TEP, Solicitor, Wills, Trusts and Probate
Direct Tel: 024 76493 113