Gifts and Tax Planning

As either a deputy or attorney you will only usually have very limited powers to make gifts on behalf of the person you are acting for. This will typically mean you can make gifts on the usual occasions such as birthdays, Christmas or weddings, and the amount has to be in keeping with what that person would have done before they lost capacity. If we think about this it makes perfect sense – you are there to look after their money, not give it away.

Nonetheless, there may be occasions where it would be perfectly legitimate to consider making a much more substantial gift. This could be to support another family member, for example by assisting with expensive costs such as school fees, or as a way of tax efficient lifetime planning. If you are considering tax planning in the event of your death, then please read our section on statutory wills.

The Court has powers under the Mental Capacity Act 2005 to authorise the making of a gift on behalf of a person who lacks capacity, provided it is in their best interests. Of course, that is the tricky part – establishing that it is in their best interests to give their money away. As a result, the Court will be very careful and cautious about exercising these powers and will only do so when they are certain it is the right thing to do.

Our very experienced Court of Protection team can guide you through this process, provide specialist advice including the tax implications (in lifetime and on death) of the proposed gift, and represent you in the proceedings before the Court.

Because of the many years of practical experience across our team and the real life cases we have dealt with, we will also give you a clear indication at the beginning of a matter whether we think your proposal is likely to be successful. These are complicated issues where success is not guaranteed and we will not advise you to proceed if there is a significant risk of your proposal being rejected.

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