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Unauthorised Gifts Leave Deputies With £200k Bill

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

When a woman’s niece and great niece were appointed her deputies (persons responsible for looking after her financial affairs) under the Mental Capacity Act 2005, they made gifts of her assets to charities, themselves, family members and friends. They also incurred expenses in discharging their responsibilities. Their conduct ultimately resulted in their being taken to task by the Court of Protection.

When the woman (called GM in the ruling) became unable to look after herself, she was admitted to a care home. At that time, her estate amounted to approximately £500,000.

The order appointing the deputies stated that they ‘may jointly and severally (without obtaining any further authority from the court) dispose of money or property of GM by way of gift to any charity to which she made or might have been expected to make gifts and on customary occasions to persons who are related to or connected with her, provided that the value of each such gift is not unreasonable having regard to all the circumstances and, in particular, the size of her estate’.

After making gifts totalling £277,000 out of the woman’s estate, the deputies sought the approval of the Court of Protection for the gifts they had made. However, they did not advise the Court of the scale of the gifts.

The Court instituted proceedings to require the deputies to provide information on the sums distributed and the amount left in the estate.

It transpired that the payments made included a total of more than £100,000 paid to or on behalf of the deputies, which included money spent on watches, jewellery and luxury handbags costing some £60,000. Considerable cash gifts had been made to family members and more than £50,000 was distributed to charities. Each of the deputies had also bought a new car paid for out of GM’s funds.

The Public Guardian concluded that the deputies had made substantial unauthorised gifts and requested that they be dismissed and that the new deputy, when appointed, take appropriate action to restore the woman’s estate to ‘its proper level’.

At the hearing, the judge stressed that it is important that deputies and attorneys understand:

(a)  that they have only a very limited authority to make gifts;

(b)  why their authority is limited; and

(c)  that, in an appropriate case, they may apply to the Court of Protection for more extensive gift-making powers.

The Court approved some £73,000 of the gifts made, leaving the deputies to repay the balance of more than £200,000 to the estate.

This case should serve as a warning to all deputies and attorneys that if they take liberties with the assets of the person for whom they act, they can be held personally liable for the sums wrongly spent.

Contact us for advice on the appropriate action to take if you have a relative whose assets are being dissipated by a person controlling them.

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