Avoiding unauthorised gifts: A guide for attorneys and deputies

If you are acting as an attorney or a deputy on behalf of close relative or friend, you may give reasonable gifts to other friends or relatives on a ‘customary occasion’. This may be for occasions such as a wedding, birthday, civil partnership or religious events such as Diwali, Christmas or Hanukkah. Donations to a charity are also considered gifts.

All attorneys have a responsibility to familiarise themselves with their powers and duties under the Mental Capacity Act 2005 and its accompanying Code of Practice, which includes the restrictions on gift giving. Managing partner, Susan Glenholme gives some guidance to help attorneys and deputies understand their role and avoid a future claim against you about a gift in the future.

What is a reasonable gift?

To decide what is considered a ‘reasonable gift’, you will need to look closely at the donor’s finances. Any gifts given should not impact on their ability to be able to pay for their care for the rest of their life and should be comfortably affordable. The amount must be in keeping with what that person would have done before they lost capacity. This can vary from person to person.

The type of gifts and scope of their value is set out in section 12 of the Mental Capacity Act 2005. If a gift falls outside that scope, the attorney must get permission from the Court of Protection before making a gift.

What happens if an attorney gives a gift which they don’t have the authority to give?

If you give a substantial gift to someone or have used the donor’s money to give yourself a gift, there are a few possible outcomes.

• The Office of Public Guardian (OPG) may investigate
• They may ask you to pay back money or return gifts
• They may seek retrospective approval from the Court of Protection for the gift
• You may be removed as an attorney or deputy
• You may be ordered to pay any costs incurred.

An example of an authorised gift

A recent case Chandler v Lombardi [2022] EWHC 22 (Ch) highlights the limitations on the authority of attorneys to make gifts on behalf of a donor.

The dispute related to residential property owned in the sole name of the mother, Mrs Chandler. The claimant was her son, Anthony, and the defendant was her daughter, Janet.

Using a Lasting Power of Attorney (LPAs) Mrs Chandler appointed Janet as sole attorney but did not make her other children aware. Mrs Chandler was later admitted to hospital, suffering from dementia and delirium and was eventually discharged into a residential care home.

A year later, Janet used the LPA to transfer her mother’s property into their joint names, claiming it was a gift as her mother wished her to own all the property in recognition of the care and support that she had provided.

The rest of the family eventually found out and Anthony started a court challenge against the property transfer to make it void. He argued that their mother had lacked capacity at the time the transfer was made and Janet did not have the power to make such gift. Janet argued that her mother did have capacity and that she made the gift in accordance with her own wishes.

The Court of Protection ultimately concluded that the gift was void because it was not within the scope of gifts that Janet was allowed to make under section 12 Mental Capacity Act 2005. The gift was not made on a customary occasion or to a charity. Also, it was of an unreasonable value as the property was worth more than £150,000.

The judge emphasised Janet’s lack of knowledge to seek the Court of Protection’s permission to make such a gift was not a defence. Ownership of the house was finally rectified and changed back to the mother and onwards to her estate as she sadly died during the dispute.

Claims of this nature can still be made following the death of a party.

Debenhams Ottaway can guide you through the process and provide specialist advise of a proposed gift if you are acting as an attorney or deputy, or if you are contesting a gift.

Please contact Susan Glenholme on 01727 735636 or sg@debenhamsottaway.co.uk