Gateway Financial Advisers

A question that seems to frequently arise is whether an individual acting under a power of attorney is entitled to make gifts on behalf of the donor, especially with a view to mitigating inheritance tax.

The general principle, which is similar in England and Wales and Scotland, is that an individual with the power of attorney has no authority to make gifts unless specifically entitled to do so.

Under English law, it is possible to have an ordinary power of attorney (general or specific) or a lasting power of attorney (LPA) (previously an enduring power of attorney (EPA)).

An EPA does not need to be registered with the Court of Protection unless or until the individual creating it loses mental capacity. LPAs will need to be registered with the Court from the point at which they are to be used, regardless of the individual´s capacity. The new regime will mean that an LPA cannot be used before registration.

If an EPA or LPA has been registered, is it too late to make any gifts or take any action to mitigate a potential IHT? The answer to this is “no”, however such action can only be taken with the agreement of the Court of Protection.