• As we head closer to Christmas with final preparations under way  I thought it would be timely to remind attorneys appointed under a property and financial affairs lasting power of attorney (LPA) to pay close attention to the rules in place when it comes to making festive gifts on behalf of the person who created the LPA  known as the donor.
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• The primary role of an attorney when making festive gifts is to ensure they are following the donor’s wishes. If for instance a donor who we shall call Mr Bell instructs his daughter Holly who is his attorney to gift £50 to each of his four grandchildren, provided Holly is happy her father has capacity, his life expectancy is  five years or more and he has sufficient assets to cover these gifts comfortably then there is unlikely to be any issues.
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• If on the other hand Mr Bell was diagnosed with advanced dementia and he wanted to gift £5,000 to each of his grandchildren things become more complicated. Holly would need to assess whether the gift was reasonable given her father’s health, financial circumstances both now and in the future with consideration given to the prospect her father may need to fund carers to support him in his home in the coming months. 
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The decision as to what is considered a reasonable gift is a matter for an attorney to decide. This is usually an easy decision if the donor has capacity. Under these circumstances I always recommend the donor personally makes these gifts rather than the attorney. However, where capacity fluctuates I would recommend the attorney obtains a medical assessment as evidence the donor has the relevant understanding at the time of the gift before proceeding. If the donor does lack capacity the attorney should pay particular attention to the following:

a) What will the impact of these gifts be on the donor’s finances now and in the future?

b) What is the life expectancy of the donor?

Life expectancy is an important consideration as there could be inheritance tax consequences if the donor passed away within 7 years of the date of the gift.

c) Does the gift have an impact on the terms of the donor’s Will?

d) Is the gift in the donor’s best interests? 

If the donor made regular festive gifts similar in nature over many years and indicated provided their finances allow they would wish for these gifts to continue there may not be an issue. If this gift was out of character or the gift was made to you personally as an attorney or a member of the attorney’s family unless the LPA contained a specific instruction authorising these gifts the attorney must seek approval from the Office of the Public Guardian (OPG) before proceeding. 

Ultimately as an attorney you have a duty to act with the utmost trust and confidence. You are also unable to profit from your role unless this is specifically authorised. If you are ever in doubt when it comes to making gifts as an attorney I would always recommend you seek legal advice before proceeding. If gifts are made which require OPG approval and you do not obtain approval the OPG has the power to investigate and ask you to explain your actions. Record keeping and the reasoning behind such gifts is essential. If you fail to do so and the OPG concludes the gifts were not in the donor’s best interests you could be removed from your role as an attorney and be instructed to return the gifts.

If you would like any advice on your duties as an attorney please contact me using the button below. 

Wishing you a Merry Christmas and a Happy New Year.