To Gift or Not to Gift

In a recent ruling, a son appointed as attorney under his elderly mother’s Lasting Power of Attorney successfully applied to the Court of Protection for authority to make gifts totalling some £7 million from his mother’s estate, including a gift of £6 million to the attorney himself.

The court heard that the donor, a wealthy 72 year old woman who was suffering from dementia and lacked capacity to make decisions for herself, had made a Lasting Power of Attorney eight years ago appointing her only son as sole attorney. The attorney made the application to allow him to gift £6 million to himself and an additional £1 million to various charities in order to potentially reduce the Inheritance Tax liability upon his mother’s death by up to £3 million.

There are strict rules in place regarding the duties and obligations of an attorney in relation to gifting and usually an attorney is not able to benefit from their position. However, in this instance, the gift was approved on the basis that, on balance, the “pros outweighed the cons” and it was felt that the gifts were in the best interests of the donor. Various factors were taken into consideration including the content of the donor’s will, the size of the estate and the support of the donor’s financial advisor.

Whilst the surprise ruling highlights the flexibility of the Court of Protection when making decisions that are in the best interests of the donor, it is important to remember that there are strict obligations that an attorney must follow when making gifts on behalf of a donor. For any gifts that are considered outside of the defined scope of seasonal or customary, an application to the Court of Protection would need to be made.

For further advice regarding duties as an attorney or to discuss Lasting Powers of Attorney in more detail please contact Katie Kenealy in our Private Client team.

This article was written by Katie Kenealy.