Court of Protection

Advice on Financial Gifts

If someone lacks the mental capacity to manage their own financial affairs, a deputy appointed by the Court of Protection or someone granted a Lasting Power of Attorney will usually be managing their finances on their behalf.

It is common for the deputy or attorney to want to make a financial gift on behalf of the person lacking capacity, such as for birthday or Christmas presents, and although it may seem a perfectly reasonable thing to do, there are legal limits to what the gift can be.

LIMITS ON GIFTS BY ATTORNEYS AND DEPUTIES

There are two specific circumstances when the disposal of money or property in the form of a gift can be made, according to the Mental Capacity Act 2005:

  • On customary occasions to people who are related to or connected with the person lacking capacity.
  • To a charity which the person lacking capacity had previously given to, or might have been expected to give to.

In every case, the value of the gift must be reasonable regarding the circumstances and in particular the size of his or her estate.

Things that must be considered include the wishes of the person lacking capacity, the contents of his or her will, their previous habit of making gifts, any ongoing care costs and their life expectancy. And extra rules will apply where the value of the estate exceeds the Inheritance Tax limit.

Any proposed gifts which do not meet these considerations will need to be approved by the Court of Protection.

These might include strategic tax planning or the payment of education fees and because of the complexity, it is important to take professional advice about the process from a solicitor who specialises in this type of work.

The legal costs of a successful application are usually met from the funds of the person lacking capacity.

CONTACT LANYON BOWDLER

Give us a call on 0800 464 0086 or complete our online enquiry form, to see how we can help. We have offices in Telford, Shrewsbury, Oswestry, Ludlow, Bromyard and Hereford so are able to act for clients all over Shropshire, Herefordshire, Mid and North Wales and across the Midlands.

For a friendly chat about how Lanyon Bowdler can help, please contact Neil Davies, Head of Court of Protection, or a member of his team on 01743 280280.

Lanyon Bowdler is one of the very few legal practices in the region with its own specialist Court of Protection department which deals with many gift applications each year.

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