Can I Give A Gifted Deposit When Acting As Attorney?
“Can I Give A Gifted Deposit When Acting As Attorney?” Conveyancer, Katie Holmes discusses in her latest blog…
It is widely reported that it has become increasingly difficult for the younger generations to save up enough money for a deposit for a house. Due to the ever-increasing demand for property, rising house prices and high rent, unfortunately, many people feel they will never be able to purchase their own home.
It is for this reason that many parents have decided to assist their children or grandchildren with a generous gift from the ‘Bank of Mum and Dad’. But what about when the money is gifted via an attorney?
What Is An Attorney?
An attorney is a person or people who have been entrusted by someone (the donor), who may not be able to deal with their own affairs. The Attorney will therefore deal with their finances on their behalf (more info here).
When Does An Attorney Step In?
The situation frequently arises where an older relative must sell their property when they move into care. At this point, their attorney steps in to deal with the sale on their behalf. At the same time, there may be another family member who is looking to get onto the property ladder but just needs a bit of help starting off. To the family and the attorney, it may seem like a win-win situation to sell the property to the family member at a discount. However, attorneys must be wary of gifting any substantial amount of equity in the property.
If the Donor possibly has mental capacity then it may be sensible to arrange for a mental capacity assessment. The Donor could possibly make the gift themselves or through their attorneys. Though where the gift is made via the attorneys the Donor needs to be involved as much as possible in the process.
Why Must Attorneys Be Careful When Making Gifts?
Attorneys must be careful when making gifts, particularly where the Donor has lost mental capacity or where capacity fluctuates. There are strict rules in place and attorneys only have very limited power to make gifts. The gift made must be of reasonable value given the size of the person’s estate (all the money and property they own).
Gifts involving a property or equity in a property are very likely to require the attorneys to make an application to the Court of Protection for approval of the proposed gift (more info here).
What Is The Risk Of A Donor Making A Substantial Gift?
As a separate point, a Donor regardless of their capacity, making a substantial gift during later life runs the risk of falling foul of ‘deprivation of assets’ rules, whereby a Local Authority could challenge such gifts if the donor needed financial assistance in meeting their care and support needs.
It is beneficial for all parties to take advice before proceeding with the conveyancing.
If you have any questions regarding gifting a deposit, or any other conveyancing enquires. Please do not hesitate to contact me at k.holmes@timms-law.com. Alternatively, visit the conveyancing section of our website here.
December 2021