Gift of annual allowance under EPA

(Claire Gordon) #1

Client is attorney for his mother who has advanced dementia and lives in a residential care home. Her estate is worth about £950,000 and her life expectancy is approximately 6 months. The client wants to gift her annual allowance of £3000 which I understand comes under the “de minimis” exceptions and will not require an application to court. No similar gift was made the previous year. Can the client gift £6000 this year?

Claire Gordon
Will Matters LLP

(mullenky) #2

Claire, I suspect the most important part of your message is the initial “Client”.

You seem to be thinking of IHT exemptions, but an attorney has no power to make a gift so the query is irrelevant [unless you have convincing evidence that the donor of the power retains sufficient capacity to make the gift herself?]

Kevin Mullen

(Neil Jones) #3

Hi Claire,

There are de minimis exemptions that an attorney can make under certain circumstances. See the OPG practice notes - PN7:
https://www.gov.uk/government/publications/public-guardian-practice-note-gifts/public-guardian-practice-note-pn7-giving-gifts-web-version#applying-to-the-court-of-protection

Regards

Neil Jones
Canada Life

(Claire Gordon) #4

Hi Neil
Thanks for your response - I have read Practice Note 7 which only refers to a gift of the £3000 annual allowance. I wondered whether there was any authority for an attorney to gift the previous years annual allowance where it had not been previously gifted?

Claire Gordon
Will Matters LLP

(Ben Leach) #5

Hi Claire

It may be helpful to look at the judgement on which the practice note is based: https://webarchive.nationalarchives.gov.uk/20130604192647/https://www.justice.gov.uk/downloads/protecting-the-vulnerable/mca/orders-court-protection/gm-judgment.pdf

For what it’s worth I’ve discussed this with a colleague, and the conclusion we reach is that a strict interpretation does not allow for the previous year’s exemption to be added. However, I think a pragmatic approach is to consider what risk is involved. For example, if there is just one residuary beneficiary who would receive the gift in any case, or they are one of several residuary beneficiaries who agree to have the gift deducted from their share under the will, then it is difficult to see why anyone should object, other than HMRC. But I would doubt that HMRC would want to challenge the gift for the amounts involved. I hope this is of help.

Ben Leach
Molesworths Bright Clegg