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Gift Giving by someone mentally incapable – Part 4


In the first 3 blogs I’ve gone through the cases of Re Buckley, Re GM and Joan Treadwell.  I’ve also said that I’ll discuss s.12 Mental Capacity Act – so I’ll finally do that and talk about what all these cases mean.

It all starts with the Mental Capacity Act s12 which states (I’ll paraphrase a bit): The attorney may make gifts (a) on “customary occasions” to persons (including himself) who are related to or connected with the donor, or (b) to any charity to whom the donor made or might have been expected to make gifts, if the value is not unreasonable having regard to all the circumstances and, in particular, the size of the donor’s estate.  It goes on to clarify that “Customary occasion” means: the occasion or anniversary of a birth, a marriage or the formation of a civil partnership, or any other occasion on which presents are customarily given within families or among friends or associates.  This is of course as long as there are no restrictions within the LPA or Deputyship order.

The cases all said ignorance of the law is not a defence and the latter two were clear that some level of gifts was fine without having to make an application to the Court of Protection, but that the acceptable level is fairly modest.  But if the estate is over the nil rate band for Inheritance Tax purposes, then the annual exemption (£3,000) would probably be acceptable, as well as around 10 small gift of £250, so a grand total of around £5,000-£5,500 on an estate worth not less than £325,000.  So that covers the value point, but that statute also has the important issue of “customary occasion”.

“Customary occasion” is Christmas, birthdays and marriage, but the case of Joan Treadwell also expanded that to include things like housewarming or graduation, but again the gifts should be modest with for example £20 for housewarming.

“Connected persons” are relatives and close friends, but people that the person knows and likes, just because they may be that person’s relative doesn’t mean they like them or would have given them gifts when they were well.  Charities that the donor might have made or be expected to make will depend on what causes if any the donor favoured.  But someone with a pet who went into care, might give something to an animal rescue charity who rehomes the pet.  They may have made regular charitable donations, but any charitable donation should be something that they would have made themselves, so a staunch carnivore would probably never made a donation to the vegetarian society and a vegetarian wouldn’t donate to butchers charity!

So to comply with s12, gifts must be all these things, reasonable, modest in size, to friends or family (that they like) or appropriate charities and given on customary occasion.  The gifts cannot just fulfil some of these statutory requirements; they have to fulfil them all.  Only when they have fulfilled all of these requirements are they likely to be OK, anything that doesn’t fulfil these requirements should be an application to the Court of Protection for approval.