Gift Giving by Someone Mentally Incapable – Part 6

13 Mar

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Gift Giving by someone mentally incapable – Part 6

 

In the first 5 blogs I’ve gone through some cases, then s.12 Mental Capacity Act and gifts by Deputy, finally I’ll turn to gifts by Attorney of a Lasting Power of Attorney (LPA) (or an Enduring Power of Attorney).

 

There is guidance issued by the Ministry of Justice and the guidance is that if there is any provision in an LPA about gifts, then the Office of the Public Guardian (OPG) will send it the LPA to the Court of Protection to have the provision severed.  Which all seems a bit contradictory, as s.12 Mental Capacity Act says season gifts to connected persons (or charity) that are reasonable are acceptable!  However the OPG do have powers to investigate the estate and therefore don’t know if this LPA relates to someone who has very limited assets or is a multi millionaire!  So the OPG err on the side of caution and sever all provisions about gift giving, just in case there are not enough assets to be able to make any gifts.

 

So when drafting an LPA, don’t put in any provisions about gifts, they’ll just get severed.  That does not defeat the statutory provisions of s.12 MCA, they still stand, even in the event of a severed provision in an LPA (even if the severed provision is about s.12!!).

 

We are therefore really in the same place as gifts by Deputy; they have to comply with all the conditions set out in s.12, which are the same as already discussed.  Any gifts must be reasonable, on seasonal occasion and to family or charities that the person would have given gifts to.  Very importantly, they must be reasonable in value in relation to the size of the estate, this is probably the most important bit of what they must be reasonable in relation to.

 

Any gifts, loans or transactions that are in some way questionable that do not comply with s.12 should not be done without an application to the Court of Protection to approve them and the application should be made before, not afterwards, the Court is not so keen on it happening that way round!  But as discussed, this is at significant legal cost, so should not be undertaken lightly.

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