Our inheritance dispute team are often asked, ‘Can a power of attorney gift money to themselves or their friends and family?’ Solicitor Chris Green, looks at the legal position.
An attorney can make gifts out of a Protected Party’s funds, but the position is regulated in law to ensure that financial abuse does not occur.
For a valid gift to be made, the attorney must be able to establish that:
- it is in the Protected Party’s best interests;
- the Protected Party is expected to provide for the recipient’s needs
- it is a gift of a seasonal nature or on an anniversary (i.e. a birthday, wedding or civil partnership anniversary) to someone who is related to or connected to the Protected Party; and
- the gift is not unreasonable, taking all relevant factors into account, including the extent of the Protected Party’s funds.
The “best interests” test is an objective one. There is a checklist of factors in the Mental Capacity Act which an attorney must consider.
The Office of the Public Guardian has also issued guidance on gifts and payments made by an attorney to family members in respect of care provided to a Protected Party.
Should a power of attorney gift money to themselves or someone connected with them from the funds of a Protected Party, the attorney should apply to Court for approval of the gift. Courts have the power to either retrospectively ratify or disallow a gift by an attorney.
In a recent case involving a dispute between two brothers, the court ratified payments and gifts of £72,820.29 made by one of the brothers in his capacity as attorney, but disallowed payments and gifts with a value £15,546.48. In reaching this decision the judge took all the circumstances of the case into account, analysing the figures and applying the factors listed above.