A Lasting Power of Attorney (LPA) is an important legal document that allows someone (the “donor”) to give another person (the “attorney”) authority to manage their financial affairs if they lose capacity or wish to delegate responsibility.
When people think of an attorney’s powers, they often assume it is a blanket authority to do whatever is necessary. However, the law places very clear limits on what an attorney can and cannot do.
One of the most significant restrictions relates to gifts. This is an area where many families are caught out, sometimes with costly consequences.
What is a gift under an LPA?
A gift is not only money handed over in a birthday card. It can also include:
- Selling property at less than market value
- Waiving a debt owed to the donor
- Making charitable donations
- Putting money into another person’s account
Because gifts reduce the donor’s estate, there are strict rules to ensure that an attorney does not overstep their authority.
The legal framework
The powers of attorneys are governed by the Mental Capacity Act 2005, which provides the foundation for decision-making on behalf of someone who has lost capacity. The Office of the Public Guardian gives practical guidance, set out in the Practice Note on Giving Gifts.
Under section 12 of the Act, attorneys are permitted to make only very limited gifts:
- On customary occasions such as birthdays, weddings, or religious festivals
- To people (including family members) who are related to or connected with the donor
- To charities the donor supported, or might reasonably be expected to support
Even then, the gift must be of reasonable value, taking into account the donor’s overall financial circumstances.
When is Court of Protection approval required?
If an attorney wishes to go beyond these limited powers, they must seek approval from the Court of Protection.
For example, it may be entirely sensible from a family perspective to gift substantial sums to children or grandchildren to reduce inheritance tax exposure. But, without the Court’s authority, such gifts would be outside the attorney’s power.
Acting without approval could lead to investigation by the Office of the Public Guardian and even personal liability for the attorney.
You can find more about the Court’s role on the Courts and Tribunals Judiciary website.
A practical example
Consider this scenario. A widowed donor has £300,000 in savings. Her attorney, a son, knows that his mother always talked about wanting to help her grandchildren onto the property ladder. He decides to gift £50,000 to each grandchild to buy a first home.
Although the intention is generous and consistent with her wishes, this is not permitted without the Court of Protection’s approval. The gifts are far larger than what could be considered “customary” and could prejudice the donor’s ability to meet future care costs.
What the attorney should do is apply to the Court of Protection, explaining the donor’s finances, the size of the proposed gifts, and any evidence of the donor’s past intentions. If the Court agrees, it can authorise the gifts formally.
Why these restrictions exist
The restrictions may feel frustrating, but they exist to safeguard vulnerable people. Attorneys have a duty to act in the best interests of the donor at all times. By requiring Court oversight for anything outside ordinary giving, the law ensures that large transfers of wealth cannot happen without careful scrutiny.
Final thoughts
An attorney’s role carries great responsibility. While attorneys have wide powers to manage day-to-day finances – such as paying bills, managing bank accounts, or even selling property – their authority to make gifts is deliberately narrow. Anyone acting as an attorney should take the time to read the Mental Capacity Act Code of Practice and seek advice if in doubt.
By understanding these limits, families can avoid unintentional mistakes and ensure that the donor’s assets are protected for their benefit.
If you are acting as an attorney under a Property and Financial Affairs LPA and are considering making a gift, it is essential to understand the legal boundaries and seek appropriate guidance. Professional advice can help ensure that any proposed gifts are lawful, proportionate, and in the donor’s best interests.
If you are unsure whether Court of Protection approval is required, or if you need support preparing an application, speaking to a solicitor with experience in this area can provide clarity and peace of mind. Get in touch with one of our experts.
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