Many people feel extremely honoured when asked by a loved one to act as an attorney under a financial Lasting Power of Attorney (LPA). A financial LPA covers decisions about all aspects of your finances. It comes into effect if you lose mental capacity, or if you no longer want to make decisions for yourself. However, people often do not understand the implications of agreeing to be an Attorney, including that they risk being investigated by the Office of the Public Guardian (OPG).
One of the most common reasons for an OPG investigation, is when they have been alerted that an Attorney has made a gift under an LPA. Quite often, the Attorney makes a gift in good faith and without any intention of over reaching their powers but without full knowledge of what they can and can’t do as an Attorney. Imagine the scene: Doris is suffering with dementia and has created an LPA, appointing her daughter Lucy as her Attorney. It’s Lucy’s daughter’s 21st birthday and she’d like her to receive a special present from her grandparent. Lucy buys her daughter a £500 gold bracelet but she chose not to consult with Doris beforehand, as her mother would be unable to understand the conversation. Lucy believes her mother would have wanted to buy a special gift so uses her money to buy the bracelet anyway. In the past, Doris has spent around £50 on her grandchildren. The more expensive gift leaves Lucy’s brother Jason unhappy, as he thinks Lucy has acted in her own interests. He decides to make a complaint to the OPG. An OPG investigation can be very stressful and invasive. To avoid this, it’s vital that Attorneys are aware of their powers when it comes to making decisions and gifting in particular.
The general rules about gifts made under an LPA
The general rule is simple: you must not make gifts as an Attorney (without the authority of the person you have appointed the Attorney – the Donor) apart from some limited exceptions.
To qualify as an exception, the gift must satisfy the following three points;
- Be given on a customary occasion (i.e. birthday, births, weddings or civil partnership, Christmas, Eid, Diwali, Hanukkah and Chinese new year); and
- Be gifted to someone related or connected to the Donor or to a charity the Donor supported or may have supported; and
- Be of reasonable value taking into account the circumstances and the value of the Donor’s financial assets.
What should Attorneys do if they want to give a gift under an LPA but the Donor has not given authority and they believe they do not have capacity to make a decision?
The first stage is for the Attorney to take all reasonable steps to help the Donor make an independent decision. This would include providing all information required to make the decision and possible consequences of making the gift.
If, having taken these steps, the Attorney believes the Donor lacks capacity, they must not make any gifts apart from those exceptions detailed above. If Attorneys give gifts outside of their powers, there may be serious consequences. If the OPG commence an investigation they may give the Attorney a warning, request the value of the gift is repaid, and in serious cases, they can apply to the Court of Protection for the Attorney to be removed.
If an Attorney has any doubts about making gifts under an LPA, they should seek legal advice.