Gifts and charity in your LPA

Your attorneys can only make small gifts from your money, and only in limited cases. The law lets them give presents on occasions like birthdays, and give to charities you support. Your LPA can tell them what you would like, or stop gifts altogether. Without clear wishes, families can get this badly wrong, as Re GM shows.

This guide is one of a series on the preferences and instructions our LPAs offer. These clauses are all in the property and financial affairs LPA.

The charity clauses: keep giving, or start a new gift

What they do. There are two clauses, and both are preferences.

• Continuing donations to charity. Your attorneys carry on the donations and standing orders you already make to charities. They do so only if the money is not needed for you, and only if it is in your best interests.
• New donation to charity. Your attorneys give a set amount each year to a charity you name. You choose the charity and the amount.

Why they help.

• They keep your giving going. A charity you have backed for years need not lose your support because you can no longer manage your bank account.
• They show your attorneys what you care about. Your attorneys do not have to guess which causes matter to you.
• They put your needs first. Giving stays second to paying for your own care and living costs.

The gift clauses: carry on, or no gifts at all

What they do. These two clauses are instructions, and you would choose one or the other.

• Keep up birthday and festive gifts. This records that you would like the regular birthday and festive presents you gave before your LPA started to carry on. Your attorneys still have to stay within the legal limits on gifts.
• Attorneys not to make any gifts. Your attorneys must not make any gifts from your money at all.

Why they help.

• They settle the question in advance. Your attorneys know whether the family presents should continue or stop.
• They keep things fair. Regular presents to grandchildren can carry on as before, so nobody is left out.
• They give you a firm line if you want one. If you would rather every penny stays with you, the "no gifts" clause makes that clear.
• They protect your attorneys. An attorney who follows your written wishes is easier to defend if a relative later complains.

Gifts are only one way your money can be used. Our guides to investments and money and paying attorneys and carers cover the others.

What the law and official guidance say

The starting point is section 12 of the Mental Capacity Act 2005. A financial LPA does not authorise your attorneys to dispose of the donor's property by making gifts, except in two cases.

• Customary occasions. Gifts to people related to or connected with the donor, including the attorneys themselves. The Act means birthdays, marriages, civil partnerships and their anniversaries. It also covers any other occasion on which presents are customarily given within families or among friends or associates.
• Charities. Gifts to any charity to whom the donor made or might have been expected to make gifts.

In both cases, each gift must be not unreasonable having regard to all the circumstances and, in particular, the size of the donor's estate. The Act also says these powers are subject to any conditions or restrictions in the instrument. So your LPA can narrow them, or rule gifts out.

The Office of the Public Guardian’s guide warns that Instructions about gifts often cause problems. It says There are strict limits on the kinds of gifts that attorneys may give on your behalf. Its examples include the preference I would like to donate £100 each year to Age UK and the instruction My attorneys must not make any gifts. Our charity and "no gifts" clauses follow those models.

Bigger gifts are a different matter. The guide says attorneys must apply to the Court of Protection for things like trust funds or school fees for grandchildren.

Without these clauses

• Your attorneys may stop your charity donations because they are not sure they are allowed to continue them.
• Or they may give too much, believing it is what you would have wanted.
• Relatives may disagree about whether the usual presents should carry on.
• An attorney who gives away more than the law allows can be made to pay it back.

What happened in Re GM

GM was a widow in her nineties with vascular dementia, living in a care home in Derbyshire [4] [7] [9]. Her daughter died in 2010 and left her just over £300,000 [5]. GM had not made a will [8].

The court appointed two relatives by marriage as her deputies [10]. A deputy is someone the court chooses when there is no LPA. Their gift powers were worded like section 12 [12]. The judge said the intention was that deputies have the same powers to make gifts as attorneys under an LPA [53].

What went wrong. The deputies asked the court to approve gifts of £231,259.50, plus £46,552.24 of "expenses" [25]. The gifts included £57,352 to charities [26]. They also included a Rolex watch and rings for themselves, and £10,000 each to several family members [27] [30]. The "expenses" were a car and a computer each [32].

They had not discussed any of it with GM [39]. Before her dementia, GM’s own gifts were modest. She had a £20 monthly direct debit to the National Deaf Children’s Society. That charity was not one the deputies gave to [82]. The judge noted that unfortunately there is no relevant written statement made by her when she still had capacity [82].

What the court decided. Senior Judge Lush said deputies and attorneys must realise that they have only a very limited authority to make gifts [54]. The first question is always whether a gift is in the person’s best interests. Their past habit of giving is one of the things that counts [67]. He said the point at which a gift becomes unreasonable is likely to be low [73].

The judge approved the charity gifts, which the Public Guardian did not challenge. He also approved some smaller family gifts, £73,352 in all [93]. He found the larger gifts completely out of character with GM’s own giving [95]. On their belief that they were allowed to make them, he said: Ignorance is no excuse [96]. Being GM’s only visitors did not give them a licence to loot [98]. They were left owing £204,459.74 to GM’s estate [102], and the court removed them as deputies [108].

The lesson. The court had to work out GM’s wishes from scraps of evidence, such as one small direct debit. Written wishes about gifts and charities give attorneys a clear guide. They also show what you did and did not want, if anyone asks later.

Preference or instruction?

The two charity clauses are preferences. Your attorneys should bear them in mind, but can hold back if the money is needed for you. Your wish to keep up birthday and festive presents works best as a preference too. The official guidance says an instruction that makes such gifts compulsory would be invalid, because it could stop your attorneys acting in your best interests. Stopping gifts altogether is different. That one is an instruction, and the guidance gives it as an example.

This article is for general information and is not legal advice. If you want your attorneys to make larger gifts, or you are an attorney unsure what you can give, please get in touch.

Sources

• Mental Capacity Act 2005, section 12, legislation.gov.uk. Scope of lasting powers of attorney: gifts.
• LP12: Make and register your lasting power of attorney, Office of the Public Guardian. Gifts, and examples of preferences and instructions.
• Re GM; MJ and JM v The Public Guardian [2013] EWCOP 2966 on Find Case Law. Also cited as [2013] EWHC 2966 (COP). Judgment of 22 April 2013.
• Re GM [2013] EWCOP 2966 on BAILII