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Gifts and powers of attorney: Q&A

Question:

My elderly mother made a Power of Attorney in favour of my brother some time ago. Since that point I think he has been using her money to benefit himself and giving extravagant gifts to his children. Is he allowed to do this and is there anything I can do?

 

Answer:

If your mother made a Power of Attorney more than a year ago, it is likely that she signed an Enduring Power of Attorney in favour of your brother. If she made the Power more recently than this it is likely she granted a Lasting Power of Attorney in favour of your brother. The rules in relation to gifts for both are similar, as follows:

As a general rule, an Attorney does have power to make gifts. Therefore your brother is within his rights to make gifts to members of his family provided certain conditions are met.

Firstly, there must be no restriction or condition in the Power of Attorney itself which prohibits the making of gifts. There are relevant sections in both Enduring and Lasting Powers of Attorney where this should be clearly visible.

The recipient of the gift must also fall within specific parameters. The recipient must either be a charity or an individual who is related to or connected with your mother. In this case, the recipients of the gifts would be her grandchildren who would comfortably fall within the parameters.

The gift has to be “of a seasonal nature”. This includes the birthdays of both the donor (your mother) and the actual recipients. Presents for Hanukkah, as well as Christmas or Easter presents would be included, as would presents given on a wedding anniversary. It is generally considered that the presents given for Christenings, Confirmations, Barmitzvahs, Graduations, Engagements or Retirements are excluded from the scope.

The value of the gift being made must not be unreasonable. If your mother only has assets of £10,000.00, and the gifts being made by your brother to his children are of significant value (say, for example, £1,000.00), then it is arguable that the value of the gift is unreasonable. If, however, your mother is a wealthy lady with significant assets, an otherwise large gift to the value of £1,000.00 to your brother’s children may not be unreasonable.

Finally, the general, common sense rule (and certainly a question a Judge would ask) is; ‘is the gift one which the donor would have made themselves’?

Basically, if the above conditions are all satisfied, then your brother is not acting beyond his powers. If you have concerns about how he is acting or have actual knowledge that these gifts have been made outside of the above parameters, your best course of action is to contact either a solicitor specialising in this area of law (such as my colleagues at Linder Myers) or The Office of the Public Guardian directly. Details can be found on the Public Guardian website.

Public Guardian
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Moya McLoughlin

Moya McLoughlin

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Moya is a probate executive in the trusts and estates department in Shropshire.

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