Gift Giving by someone mentally incapable – Part 5
In the first 4 blogs I’ve gone through some case law and then s.12 Mental Capacity Act – so the next thing to talk about is gift giving by Deputy.
Deputies are like Court appointed Attorneys, that is not exactly what they are, but that is probably the easiest way to think about them. The Court of Protection, via the Office of the Public Guardian (OPG) have a role in monitoring them, to make sure that the Deputy is doing what they should do. There is a bond in place, which covers the value of the estate, so that if the Deputy absconds with some or all of the person’s (they are called a patient) money, then the Bond will give them the money back and pursue the Attorney to try to get it back. There is also a Court Visitor, who will visit the individual to make sure everything is fine and finally the Deputy must submit accounts to the Court each year. All of these things cost money, which is paid for from the patients funds, so it is always far cheaper to have a Lasting Power of Attorney than to obtain a deputyship order, as the LPA has none of these after costs. In all cases though the OPG can investigate and refer the matter to the Court and the Court has the power to revoke both an LPA or Deputyship order.
Anyway, having discussed what a Deputyship order is, back to giving: In standard Deputyship orders there is usually a clause that says something like “the Deputy (without any further order from the Court) make gift of a seasonal nature to persons who are related to the patient and the Deputy may make gifts to any charity that the patient made or might be expected to make, provided the gifts are not unreasonable in all the circumstances and in particular to the size of the patients estate”. This clause is a basic paraphrase of s.12. I’ve seen in some older ones specific limits on how much the gifts should be or at least how much they should not exceed in value, but the Court doesn’t do that any more, as they now retain the flexibility of the “it should not be unreasonable” concept!
One point to remember is that an application to the Court of Protection for a significant gift is expensive and is likely to cost not less than £10,000 in legal costs and more if it is contested. There would be an applicant to the Court, ie the person asking for the gifts to be approved (this is likely to be the person who received the gift/s). When an application like this is make, the Court usually appoints the Official Solicitor to act for the patient, and both the applicants legal fees and the Official Solicitors fees are likely to be taken from the patients funds. The Court is well aware of this and would therefore take a view of the balance between a slightly over generous gift, against the cost it would take to have that gift approved – which is the bigger loss to the estate? If they gift/s were too generous, then this should be picked up in the accounts and by the Court Visitor, so that it does not continue unchallenged for years.
So it is clear that gift giving is possible, but it should not be on the generous size and should comply with all the points of s.12 Mental Capacity Act.