Generally it is true to say that an Attorney acting on a Power of Attorney cannot dispose of the Donor’s assets. They have to be retained for the Donor’s benefit almost as if he is magically going to get younger and fitter and recover his capabilities and have no need for an Attorney.
Of course that doesn’t happen in the real world , but it remains the underlying ethos of how you are to approach the duties of acting as an attorney. But the severity of this principle prevents an attorney from taking advantage of some real and perfectly lawful disposals which are very beneficial not least to the Donor’s family even if not to the Donor himself.
It is common knowledge that a person may give away assets and then if he survives seven years those assets won’t come into reckoning for Inheritance Tax. Tax savings may begin after just three years in a large estate. Less well known is the fact that the Court of Protection can give permission for gifts to be made when the Donor cannot make them himself, as happened in a recent case PBC v The Official solicitor (2018)EWCOP19. The Donor was an elderly lady with the onset of dementia living in a care home. She was a high net worth individual with an estate of about £17Million. We will use her initial “J”. J’s son “P” applied to the court for authority to make gifts amounting to £7 million some of which would go to charities, and most of which were the acceleration of gifts that were already written in J’s Will. The intention being that if J survived just three years the tax on the estate would reduce from £5.5M to £3M.
The recipient parties (including MIND and other charities) all consented to the gifts but the authority of the Court of Protection was needed.
But the court can only give consent to matters that are in the Donor’s interests. Clearly it is not common to hear that making a gift actually benefits the donor but this sometimes can be true. The prosperity of the family and the satisfaction of making worthwhile gifts are real issues, and when the Court balanced all the factors for and against the transaction it found that altruistically making gifts can be a real pleasure. The court gave approval.
For further advice about Powers of Attorney and Deputyships contact John Pulham at:-
Messrs Pulham & Co
Telephone (01728) 602084 or e-mail firstname.lastname@example.org