Can a Power of Attorney gift money to themselves or family?
02/09/2019
(Last Updated: 04/09/2023)
10 min read
Key Takeaways
- A Power of Attorney or Deputy who makes financial decisions for someone can gift money to themselves or family, on their behalf.
- A Health and Welfare lasting Power of Attorney cannot give gifts as part of their role.
- There are strict rules and limits which must be complied with.
- Gifts must be 'reasonable', affordable and in keeping with the donor's normal habits.
- You cannot give away a persons assets to avoid spending them on care home fees.
Can I give money to my family?
Gifts help to preserve the relationships with family and friends of the person whose affairs you are helping to look after. The law recognises this while laying down careful restrictions to protect against people putting undue pressure on you to give them gifts:Attorney or Deputy?
Both of these terms describe people appointed to look after another person's affairs either in case that person loses the ability to do so or if they have already advanced to mental incapacity.A power of attorney - or PoA - is appointed by the person involved when that person is still 'of sound mind', whereas a deputy is appointed by the Court of Protection to an applicant when the person involved (whom the deputy will have power over) is no longer able to do so.
- 1
What counts as a gift?
It also includes all of the following:
- donations to charities
- paying someone’s school or university fees
- living rent free or at a ‘friends and family’ rate in a property belonging to the person
- selling the person’s home to someone at less than market value
- creating a trust for someone from the person’s property
- giving someone an interest-free loan from the person’s funds (the ‘lost’ interest counts as a gift)
A solicitor will advise, if there is any question mark over whether you as an attorney, by making a gift or loan to yourself, are creating a potential conflict of interest, to apply to the Court of Protection for approval.
- 2
Who can give gifts?
Does your giftor have mental capacity?
You should ask yourself the following:- Can the person understand all the important information about the gift (what it is, who it’s being given to, its value)?
- Can the person hold on to that information long enough to make a decision?
- Can the person weigh up all the available information to make a decision?
- Can the person communicate their decision?
You should note, however, that if the person makes a questionable decision, this isn't proof of mental incapacity!
However, if you're unsure, you mustn't make a gift until you can be more sure of the person's mental capacity. This might mean getting the person's GP to make a mental capacity assessment: you should be aware that your actions are subject to review by the Office of the Public Guardian.
You should therefore do as much as you can to involve the donor in the gift decision, even for example, using sign language or pictures to communicate or choosing the best time of day for them to feel comfortable.
What if the donor can't decide?
If you've concluded - and if necessary after taking professional advice - that the person you're looking after is incapable of making a gifting decision, then you can make the decision for them.Naturally, you should think very carefully about:
- the donor's wishes, views and values; and
- the wider thoughts of family members and friends; and
- whether the donor might regain capacity and;
- very importantly: whether the donor can actually afford to give what you propose, given things like care home fees etc.
- 3
Who can you give gifts to and when?
- 1A family member, friend or acquaintance of the donor on a 'customary occasion'
- 2A charity
The gift must be of reasonable value* in the context of the donor's total estate i.e. not too expensive, and in keeping with what the person would have done with full mental capacity. Most of all, gifting cannot impoverish the donor - and you might have to consider how long the person is expected to live when considering this.
Any gift can't go to a person or organisation unconnected with the gift-giver.
You should keep a record of any gifting you do on someone's behalf as an attorney or deputy (the latter has to record these in an annual report). The Office of the Public Guardian, as previously stated, can at any stage ask you as a power of attorney to account for any gifts you've given out including any power of attorney reasonable expenses. Failure to keep accounts can mean you fall foul of the law.
Can a power of attorney receive gifts themselves? In effect, yes, if in keeping with the advice we've given, but the barometer is always what is considered reasonable and in keeping with the wishes of the donor.
- 4
What gifting counts as reasonable? Case Law
- The donor has a life expectancy of less than five years.
- The donor’s estate exceeds the inheritance tax nil rate band (currently at £325,000).
- The gifts were considered to be affordable, taking into account the donor’s care costs, and would not adversely affect the donor’s standard of care and quality of life.
- There is no evidence that the donor would oppose the extent of the gifts made on their behalf.
- Any gifts exceeding this threshold would have to be approved by the court.
Attorneys don't have to make gifts on the donor's behalf so they should use their discretion when deciding whether to exercise this power. It is also recommended that attorneys try to involve the donor in the decision making process wherever possible when deciding whether to make a gift.
Should an attorney wish to make a gift outside the scope of their powers, they must apply to the Court of Protection for authorisation using the formal application form.
- 5
'Deprivation of Assets', care home fees etc.
When local authorities check a person’s assets to see how much they should pay for care, they may include things if you have deliberately given them away to avoid paying. You also shouldn’t give things away as gifts to make the person qualify for benefits or for government help with care costs.
If there is any doubt about the limits on the gifts you can give and what is or isn't reasonable etc. you should apply for a ruling from the Court of Protection for making a gift application (not the Office of the Public Guardian).
Loans
Unless your particular order says otherwise, you'll always need to apply to the Court of Protection if you as a poa want to make an interest-free loan to someone or as a power of attorney self gifting (because interest-free loans are classed as gifts - please see above). Any loan equally must be reasonable - see above - and only go to a person connected to the donor.In sum, if you can answer yes to all three of the following questions, you don't need to apply to the Court of Protection:
- Is the gift to someone related to, or connected with, the person – or to a charity they might normally have given to?
- If the gift is to a person, is it being made on a customary occasion?
- Is the gift of reasonable value, given the size of the person’s estate and their expected future needs?
It follows that if you overstep or abuse your position as an attorney or deputy, you risk legal sanction, ranging from a warning to being removed from your position to a full criminal investigation if necessary.
- 6
Can a Power of Attorney inherit?
Strictly speaking, however, the concepts do not 'clash': the power of attorney always finishes when the subject dies.
Do you need to gift property or beneficial interest shares to yourself or family?
We can help with making gifts of property as power of attorney and navigating the legalities.Gifts may be made by transfer of equity, deed of assignment or concessionary sale, so long as they meet the criteria in the article above.
Frequently Asked Questions
Criteria
HowMuch
Written by:
Andrew Boast
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Reviewed by:
Caragh Bailey
Caragh is an excellent writer in her own right as well as an accomplished copy editor for both fiction and non-fiction books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey and mortgage related articles.