Rix & Kay’s Later Life Team have many years experience in tax planning, advice on the suitability of Court sanctioned gifts and successful applications.
Attorneys acting on a vulnerable person’s behalf have limited scope for making gifts on that person’s behalf. However, they are able to make gifts on customary occasions to persons (including themselves) who are related to or connected with the vulnerable person, or to any charity to whom the vulnerable person made or might have been expected to make gifts. Deputyship Orders usually contain a similar express authority to make gifts.
That said, the value of each such gift must not be unreasonable having regard to all the circumstances and, in particular, the size of the vulnerable person’s estate. In other words, this will usually mean that any gift must be small, particularly in relation to the assets and income the vulnerable person has.
In some circumstances, an attorney or deputy may want to make a larger lifetime gift (usually of cash, shares or property) on behalf of a vulnerable person. In such a case, the attorney or deputy will require the prior permission of the Court of Protection.
A typical example would be where the vulnerable person has substantial assets which will bear inheritance tax at the time of their death. If the attorney or deputy is able to gift assets away during the vulnerable person’s lifetime, without reducing their quality of life, it may significantly reduce the inheritance tax liability, to the benefit of their beneficiaries.
Generally, the Court will only make an order where it is satisfied that the vulnerable person has adequate capital and income to maintain their standard of living for the rest of their lifetime after the gift has been made.
Often the recipient of the gift will be someone named in the vulnerable person’s will (or in the absence of a will, someone who will benefit under the intestacy rules). The Court will require notice of the application to be given to the vulnerable person’s close relatives and anyone likely to be affected by the outcome of the application.
The general rule on costs where the proceedings concern a vulnerable person’s property and affairs is that the costs of proceedings relating to the property and affairs shall be paid by the vulnerable person or charged to their estate. However, this is always subject to the Court’s discretion.