Can a Power of Attorney Gift Money to Themselves or Family?

Can I give money to my family?

Gifts help to preserve the relationships with family and friends of the person whose affairs you are helping to look after.

The law recognises this while laying down careful restrictions to protect against people putting undue pressure on you to give them gifts.

This article will explore what is deemed a gift, who can give a gift, who they can be given to, and what gifting counts as reasonable.

1

What counts as a gift?

Gift-giving as a Power of Attorney can include buying simple gifts for occasions such as a birthday using the subject's money, and giving money or possessions to another person. However, it is not just limited to those two situations.

It also includes all of the following:

• Donations to charities
• Paying someone’s school or university fees
• Living rent-free or at a ‘friends and family’ rate in a property belonging to the person
• Selling the person’s home to someone at less than market value
• Creating a trust for someone from the person’s property
• Giving someone an interest-free loan from the person’s funds (the ‘lost’ interest counts as a gift)

This last point is crucial - it might appear strange that this is counted as a gift but the law views it as so because no interest is being paid.

A solicitor will advise the Court of Protection on any potential conflict of interest if you, as an attorney, make a gift or loan to yourself.

2

Who can give gifts?

If the person whose property and finances you are looking after has the mental capacity to decide whether to give a gift to someone, they should make that decision themselves in the first instance.

Does your giftor have mental capacity?

Ask yourself the following:

• Can the person understand all the important information about the gift (what it is, who it’s being given to, its value)?
• Can the person hold on to that information long enough to make a decision?
• Can the person weigh up all the available information to make a decision?
• Can the person communicate their decision?

Can someone with dementia gift money?

If the person cannot do one or more of these four things, they most likely lack the mental capacity to decide about a gift in the eyes of the law.

You should note, however, that if the person makes a questionable decision, this isn't proof of mental incapacity!

However, if you're unsure, you mustn't make a gift until you can be more sure of the person's mental capacity. This might mean getting the person's GP to make a mental capacity assessment: you should be aware that your actions are subject to review by the Office of the Public Guardian.

You should therefore do as much as you can to involve the donor in the gift decision, even for example, using sign language or pictures to communicate or choosing the best time of day for them to feel comfortable.

What if the donor can't decide?

If you've concluded - and if necessary after taking professional advice - that the person you're looking after is incapable of making a gifting decision, you can decide for them.

Naturally, you should think carefully about:

• The donor's wishes, views, and values; and
• the wider thoughts of family members and friends; and
• whether the donor might regain capacity and;
• Very importantly: whether the donor can afford to give what you propose, given things like care home fees, etc.

Can a Power of Attorney transfer money after death?

Even if you hold Power of Attorney, it is illegal to take money from a bank account belonging to someone who has passed away

What happens to a bank account when someone dies without a Will?

Power of Attorney ends when a person dies, so it does not matter if the POA had access to accounts when the person was alive. The bank needs to be notified, and the account will be frozen. Companies should also be informed of any direct debits or standing order cancellations

Can you empty a house before probate?

Probate is a legal procedure that occurs after someone passes away to ensure their assets go where they should. It can involve selling an inherited house, paying due taxes, and distributing assets.

Legally, before emptying the contents of a property, you should wait until probate has been granted. Nothing in the home should be off-loaded before the facts of the Will are understood

3

Can a Power of Attorney gift money to family?

Unless the particular power of attorney/deputy order says otherwise, you can only make a gift to either:

• A family member, friend, or acquaintance of the donor on a 'customary occasion' (think birthdays, weddings, anniversaries, religious celebrations, new years, etc.)
• A charity

The gift must be of reasonable value* in the context of the donor's total estate i.e. not too expensive, and in keeping with what the person would have done with full mental capacity.

Most of all, gifting cannot weaken the donor's funds - and you might have to assess how long the person is expected to live when considering this.

You should keep a record of any gifting you do on someone's behalf as an attorney or deputy (the latter has to document these in an annual report).

The Office of the Public Guardian, as previously stated, at any stage can ask you as a power of attorney to account for any gifts you've given out including any power of attorney reasonable expenses. Failure to keep accounts can mean you fall foul of the law.

Can a power of attorney transfer money to their own account? Can an attorney make gifts to themselves?

In effect, yes, if in keeping with the advice we've given, but the barometer is always what is considered reasonable and in keeping with the wishes of the donor.

5

'Deprivation of Assets', care home fees etc.

You cannot legally give someone's property away in gifts to avoid contributing to care home costs for the person you have decision-making power over.

When local authorities check a person’s assets to see how much they should pay for care, they may include things like if you deliberately gave them away to avoid paying. You shouldn’t give things away as gifts to qualify the person for benefits or government help with care costs.

Read about gifts to avoid care home fees.

If there is any doubt about the limits on the gifts you can give and what is or isn't reasonable, you should apply for a ruling from the Court of Protection for making a gift application (not the Office of the Public Guardian).

Loans

Unless your order says otherwise, you'll always need to apply to the Court of Protection if, as a POA, you want to make an interest-free loan to someone or self-gift (because interest-free loans are classed as gifts - please see above). Any loan equally must be reasonable - see above - and only go to a person connected to the donor.

In summary, if you can answer yes to all three of the following questions, you don't need to apply to the Court of Protection:

• Is the gift to someone related to, or connected with, the person – or to a charity they might normally have given to?
• If the gift is to a person, is it being made on a customary occasion?
• Is the gift of reasonable value, given the size of the person’s estate and their expected future needs?

In terms of 'can a power of attorney borrow money' from the donor, invariably you'll have to apply to the court.

If you overstep or abuse your position as an attorney or deputy, you risk legal sanction ranging from a warning to being removed from your position to a full criminal investigation if necessary.

Read more about loan agreements between friends and family.

6

Can a Power of Attorney inherit money?

Yes, a power of attorney can legally inherit assets from the person they have the power over. One might argue that, because of the privileged position they've been entrusted with, there's a reasonable likelihood they might be given something in the giver's will.

Strictly speaking, however, the concepts do not 'clash': the power of attorney always finishes when the subject dies.