Managing someone’s finances under a power of attorney or deputyship is a serious responsibility, and becomes even more complex when giving gifts. Family celebrations, charitable traditions, or even something as small as helping someone with everyday expenses can prompt questions about what an attorney or deputy can or cannot do. The rules are much stricter than many people realise – even small, seemingly harmless gestures can have significant legal and financial consequences if they are not handled correctly.
Because gifting is one of the most common areas where attorneys and deputies come under scrutiny from the Office of the Public Guardian (OPG), it is vital to understand the law before taking any action.
Our experienced Wills, Trusts and Probate solicitors have answered some of the most commonly asked questions, to help you understand what is and what isn’t allowed, and when it would be wise to seek professional advice.
What is the difference between giving a gift as a Power of Attorney or as a Deputy?
It is important to start by clarifying that a “gift in a will” is not the same as a gift made by an attorney or deputy during someone’s lifetime. A gift in a will – known as a legacy – is made directly by the individual under their Will and only takes effect on their death.
In contrast, gifts by attorneys or deputies are lifetime transactions and are tightly controlled by law. This distinction can often cause confusion, so it is essential to be clear about which type of gift is being discussed.
An attorney is appointed under an Enduring Power of Attorney (EPA), or a Lasting Power of Attorney (LPA). A Power of Attorney is prepared when the individual has mental capacity, and allows them to appoint anyone they trust to manage their affairs, should they lose capacity in the future. EPAs can no longer be created, but those prepared before the introduction of LPAs on 1 October 2007 remain valid and can still be used.
Should the individual lose mental capacity without an EPA or LPA in place, a loved one or a suitable professional associated with them can apply to the Court of Protection for a Deputyship Order (read our blog “What is a Deputyship Order”).
When it comes to lifetime gifting, the responsibilities of both the attorney and the deputy are essentially the same. If the individual has the mental capacity to make the gift themselves, they should be supported to do so. If they lack capacity, the attorney or deputy may make the decision, provided it is in the person’s best interests and may need to make an application to the Court of Protection for authority.
What is considered a gift in a will?
In a will, a gift refers to anything the testator (the person making the will) leaves to a beneficiary. This can include money, personal possessions, property, or a share of the estate.
A lifetime gift made by a person or a deputy or attorney on their behalf is any transfer of money, property, or assets without receiving full payment in return. Common lifetime gifts include:
- Charitable donations
- Paying school or university fees for someone else
- Selling property at an undervalue or allowing someone to live in it rent-free
- Creating a trust or making an interest-free loan
- Paying a family member for care (unless specifically authorised)
- Redirecting an inheritance via a deed of variation
A deputy or attorney may be asked to carry on a pattern of lifetime gifting, or they may consider a lifetime gift to help that person’s family knowing it was their wish or to help mitigate inheritance tax on their behalf.
This is where a deputy and attorney must take caution, to check they are acting appropriately within the powers available to them.
Even small sums, such as £50 for a grandchild’s birthday, can count as a lifetime gift and may not be within the powers of the deputy or attorney to make. It is not the amount that matters – it is whether the gift is in proportion to the person’s finances and is consistent with what they would have done themselves.
What is the Mental Capacity Act 2005?
The Mental Capacity Act 2005 sets out the legal framework for attorneys and deputies. Within the Act, section 12 confirms that attorneys may only make gifts if they are:
- Reasonable in value, considering the person’s estate and needs
- Given on customary occasions, such as birthdays, weddings or religious holidays
- Made to people connected with the person or to the charities they supported
All decisions must be made in the donor’s best interests, considering both past and present wishes, values, and beliefs. Attorneys must also keep clear records of any gifts made.
The powers granted to deputies are usually less extensive than those given to attorneys and they cannot make gifts without court approval. It is essential to seek guidance if you are a deputy and unsure of your responsibilities.
How to make decisions in the person’s best interests
When considering a gift, attorneys and deputies must follow the best interests principle under the Mental Capacity Act. This means more than simply judging what seems sensible at the time. The decision-maker should:
- Consider the person’s past wishes, values, and behaviour – for example, whether they regularly gave small charitable donations or supported certain family members.
- Take into account the person’s current wishes, if they can express them.
- Consult with close family and friends who may know what the individual would have wanted.
- Think about whether the person might regain the capacity to make the decision themselves in the future.
- Weigh up how the gift will affect the person’s ability to meet their ongoing and future needs.
Documenting not just the gift itself but also the reasoning behind it is essential. Good record-keeping can demonstrate that you acted carefully and protect you if the decision is later questioned.
When do you need to apply to the Court of Protection?
Making gifts without approval is risky. Attorneys or deputies may be ordered to repay the funds, investigated by the Office of the Public Guardian (OPG), or even removed from their role. In the most serious cases, allegations of fraud or dishonesty can arise.
If gifts go beyond the limited powers described above, court approval would be required. Examples of gifts include:
- Large or regular gifts of money
- Transferring or selling property at less than full market value
- Paying school fees, mortgages, or debts for someone else
- Gifting for inheritance tax planning purposes
- Creating trusts or making loans
What is De Minimis Gifting?
In some cases, small gifts may fall outside the strict authority of an attorney or deputy but do not require a court application. These are referred to as “de minimis gifts”.
The Office of the Public Guardian (OPG) and professional bodies such as the Association of Lifetime Lawyers suggest that de minimis gifting may be acceptable where:
- The person’s estate exceeds the inheritance tax nil-rate band (currently £325,000)
- Their life expectancy is less than five years
- The gifts are modest and affordable, taking into account care costs and living standards
- There is no evidence that the person would have objected
In such cases, attorneys and deputies may rely on inheritance tax exemptions, such as:
- The annual £3,000 exemption
- Small gifts of £250 per person, up to ten individuals
Even where these conditions appear to be met, attorneys and deputies should exercise caution. What may be considered reasonable in one estate could be excessive in another, and the OPG’s interpretation can vary. Professional deputies, in particular, may be held to a higher standard of justification.
What common mistakes should I avoid?
Attorneys and deputies must avoid giving away assets that could be needed to fund care or meet future expenses. This is known as deliberate deprivation of assets, and local authorities may treat such gifts as still forming part of the person’s estate when assessing eligibility for care funding.
Many errors arise not from deliberate wrongdoing but from misunderstandings of the rules. In addition to giving unauthorised “thank you” payments or using gifts for inheritance tax planning, other common pitfalls include:
- Believing that “de minimis” gifts are automatically safe without considering affordability or best interests.
- Treating any regular payments, such as pocket money for grandchildren, as customary occasions.
- Failing to keep a paper trail showing how the decision was reached, even where the gift itself seems modest.
Avoiding these mistakes can prevent costly disputes, protect family relationships, and reduce the risk of intervention by the OPG.
If you have made a mistake with a gift, it is essential to seek guidance from an experienced solicitor.
Can attorneys or deputies give gifts without approval?
Yes, attorneys and deputies can make gifts if they are in line with section 12 of the Mental Capacity Act (mentioned above). For example, a modest birthday present for a family member, a small Christmas donation to a favoured charity, or flowers for a family wedding – as long as the gifts are in the individual’s best interests, consistent with their past behaviour and affordable.
How to make a gifting application to the Court of Protection
This requires you to complete and submit a series of forms to the Court of Protection. Once the application is filed, the Court will review it, considering the following factors:
- The person’s current and future financial needs
- Their life expectancy and care costs
- Their past wishes, values, and gift history
- The size of the estate and proportionality of the gift
Be aware that submitting a gift application incurs costs, which may be paid out of the estate of the person you’re acting for or someone else ordered by the Court.
Applications can be time-consuming and complex. Deputies, in particular, have more restricted powers than attorneys, so they must take extra care. Our experienced solicitors can guide you through the process – from assessing whether approval is required, to preparing the application and supporting evidence. Acting improperly could lead to investigation or removal as an attorney or deputy, so it is always safest to seek advice before proceeding.
What happens if gifts are made without authority?
The Office of the Public Guardian (OPG) can investigate any gifts made by attorneys or deputies. If a gift is found to be unauthorised, the OPG may apply to the Court to have it repaid and may suspend or remove the attorney or deputy from their role. In severe cases involving dishonesty or fraud, the matter may be referred to the police.
If there is any doubt about whether a gift is appropriate, whether proposed or already made, it is advisable to seek legal advice. This may lead to an application for approval or retrospective permission from the Court.
How Scott Bailey can help
Gift-giving under a power of attorney or deputyship can be a complex and sensitive area of law. The responsibilities – and potential risks – are high. Attorneys and deputies must always act in the person’s best interests, keep detailed records, and proceed with caution.
At Scott Bailey LLP, our experienced Wills, Trusts and Probate team are here to help, whether you need reassurance about a modest gift, guidance on applying for approval of a larger transaction, or representation in an OPG investigation.
If you are unsure whether a gift is suitable, please contact us today to arrange advice tailored to your specific situation. Taking early legal guidance can prevent costly mistakes and provide peace of mind that you are acting lawfully and responsibly.
