Published on: 10th May 2021

Using a Lasting Power of Attorney to make gifts ~ Unfortunately Eastenders got it wrong

In a recent episode Sonia Fowler revealed to Dot Cotton’s granddaughter Kirsty that Dot had made her, Sonia, her “Power of Attorney”. Sonia told Kirsty that she was going to use the “Power of Attorney” to give Kirsty some early inheritance although she later changed her mind.

Attorneys may act using a Lasting Power of Attorney all the time that the Donor (the person giving the Power) is alive. The Lasting Power of Attorney for Health and Welfare can only be used once the Donor has lost mental capacity. The Lasting Power of Attorney for Property and Financial Affairs can be used whether the Donor has or does not have mental capacity unless it is restricted so that it can only be used when the Donor has lost mental capacity.

Making gifts as an attorney is an area which causes much comment. The main rule is that the person whose property and finances you are looking after should decide whether to give a gift – if they have mental capacity. Mental capacity means being able to make a particular decision at the time it needs to be made. If the Donor cannot decide then your decision must be based on the Donor’s best interests. You will need to think about:

• the person’s wishes, views and values and how these might affect what they would give
• what family members and friends think they would have wanted
• whether they might regain capacity and be able to make decisions about gifts then
• their current needs – just because someone used to give very generous gifts, can they afford to now?

Unless the power of attorney states otherwise, you can make a gift only if it’s either:

• to a family member, friend or acquaintance of the person on a ‘customary occasion’
• to a charity

In both cases, it’s essential the gift is of reasonable value given the size of the person’s estate (all the money and property they own).

Here is an example of thinking about affordability:

• Hannah is elderly and lives in a care home. Sometimes she can make decisions but often she can’t. Her nephew David is her attorney. He wants to give Hannah’s granddaughter Ruth a present from her for Ruth’s 21^st birthday.
• Before she started to lose her ability to make decisions, Hannah was very generous. However, her care home fees are eating into her savings and David is worried about how to meet these costs in the future.
• Although Hannah would have liked to have given a generous present, David decides that it is in her best interests to give something more modest. This way, Hannah has been helped to celebrate her granddaughter’s birthday, as she’d have wanted, but her money and her future are safeguarded.

It is important to think about deciding when a gift is reasonable. Here is an example:

• Patrick is Joe’s attorney. The men, who are in their early 60s, have been close friends since childhood. A couple of years ago, Joe suffered a major stroke, which left him unable to care for himself and make decisions.
• Patrick has been made redundant and is struggling financially. Joe has enough money to last for many years.
• Patrick wants to take money from Joe’s savings to sort out his financial problems. Joe has helped Patrick out like this in the past. Joe is also leaving nearly all his money and property to Patrick in his will. Patrick feels strongly that, if Joe were still able to understand and make decisions, he’d be happy to help Patrick now.
• An attorney must not take advantage or gain personal benefit from their position.
• After thinking it over, Patrick decides not to go ahead with the gift to himself.

Remember, the rules on giving gifts are about protecting the person’s best interests. Think carefully when giving gifts – your role is to look after the person’s financial interests with even more care than your own.

Thinking back to Eastenders we can now see that Sonia would have exceeded her authority by giving some of Dot’s assets to Kirsty as an early inheritance.

Casey & Associates has created many thousands of Lasting Powers of Attorney since they were introduced in 2007. If you do not yet have Lasting Powers of Attorney please consider arranging an appointment with a Casey & Associates consultant by contacting the friendly and experienced Client Services team on 01732 868190 or contact us using our website by clicking here.

======================================

Our Covid-19 policy is now that if you wish to give instructions or require general information about our Wills, Lasting Powers of Attorney or Trusts then we will carry out a telephone or Zoom appointment. However, if you wish to give instructions to one of our Consultants and you feel that you can only do this at a Face to Face meeting we are offering, at our Consultant’s discretion, a limited number of Face to Face appointments in most of the areas we normally cover (subject to Government advice). To see the areas we normally cover please click here. To arrange an appointment please telephone 01732 868190 or click here.

======================================

Back to all news