LPA Gifts UK (2026): What Gifts Can an Attorney Make Under a Lasting Power of Attorney?

An attorney acting under a Property and Financial Affairs LPA can only make gifts on behalf of the donor within the narrow limits set by Mental Capacity Act 2005 s.12: (1) THE STATUTORY PERMISSION — MCA 2005 s.12(2): an attorney may make gifts of the donor's property to: (a) people who are related to or connected with the donor (including the attorney themselves) on customary occasions; (b) charities to which the donor made gifts, or might be expected to make gifts, before they lost capacity; (2) WHAT IS A 'CUSTOMARY OCCASION': a customary occasion (s.12(3)) means: (a) a birthday of the donor or any person related to or connected with the donor; (b) a wedding or civil partnership of any person related to or connected with the donor; (c) the formation of a civil partnership of any person related to or connected with the donor; (d) any other occasion on which it is customary to make gifts within a family or between friends (e.g. Christmas, Diwali, Eid, Chanukah); (3) THE AMOUNT MUST BE 'NOT UNREASONABLE': even on a customary occasion, the gift must not be unreasonable in value having regard to all the circumstances and, in particular, to the size of the donor's estate (s.12(2)). A £50 birthday gift from someone with a £2,000,000 estate may be reasonable; a £10,000 gift from someone with £50,000 savings would not be; (4) THE CRITICAL LIMITS — WHAT AN ATTORNEY CANNOT DO: an attorney CANNOT: (a) make large cash transfers or gifts of property to family members as IHT planning; (b) gift a house or significant assets to themselves or others without court permission; (c) make gifts that deplete the donor's estate for the purpose of IHT planning; (d) take advantage of their position to enrich themselves; (5) THE LPA INSTRUCTIONS BOX: the LPA instrument may include instructions in the preferences/instructions section authorising additional gifting — but even such instructions cannot override the statutory limit in s.12. Additional gifting authority beyond s.12 always requires Court of Protection approval.

A very common question is whether an attorney can make large gifts from the donor's estate to reduce IHT — and the answer is generally no: (1) THE MCA 2005 s.12 RESTRICTION IS CLEAR: the statute explicitly restricts gifts to those on customary occasions at not unreasonable amounts. IHT planning gifts — even if the donor would have made them — are not within the s.12 permission unless they happen to fall within the customary occasion and not-unreasonable-amount criteria; (2) WHY THE RESTRICTION EXISTS: the restriction is designed to protect vulnerable donors from: (a) financial abuse by attorneys who might make gifts to themselves or their own family members; (b) depletion of the donor's estate to the point where their own care needs cannot be funded; (c) overriding the donor's true wishes (a gift made when the donor lacks capacity may not reflect what they would have chosen); (3) THE COURT OF PROTECTION ROUTE: where significant gifting for IHT planning is appropriate, an application must be made to the Court of Protection under MCA 2005 s.18. The Court can authorise: (a) larger gifts from the donor's estate on statutory will authority (ss.16-17) or under a specific gift authority; (b) the use of IHT annual exemptions (£3,000 per year); (c) use of normal expenditure out of income exemption (IHTA 1984 s.21) where evidenced; (d) gifts to cover school fees or grandchildren's needs; The application to the Court of Protection is not simple — it typically requires: a COP1 application form; a capacity assessment; evidence of the donor's estate and income; expert evidence that the gifts would have been consistent with the donor's wishes; legal representation; (4) WHERE GIFTS ARE PERMISSIBLE WITHOUT COURT APPROVAL: the £3,000 IHT annual exemption gifts and other small customary gifts are permissible under s.12 if: (a) they are made on customary occasions (birthdays, Christmas etc.); (b) the amount is not unreasonable having regard to the estate; (c) they are consistent with the donor's previous gifting pattern; (5) PLANNING BEFORE CAPACITY IS LOST: the most effective approach is for the donor to make significant IHT planning gifts BEFORE losing mental capacity — while they can personally instruct their solicitor or financial advisor. An LPA is not a substitute for lifetime IHT planning. Donors who wish to preserve the ability to make IHT-planning gifts should do so while they have full capacity.

An attorney who makes unauthorised gifts commits a serious breach of duty that may constitute financial abuse: (1) BREACH OF FIDUCIARY DUTY: attorneys are in a fiduciary position — they owe the donor the highest duty of loyalty. Making unauthorised gifts (whether to themselves, family members, or others) is a fundamental breach. The consequences include: (a) personal liability to repay the value of the unauthorised gift to the donor's estate; (b) removal as attorney by the Office of the Public Guardian (OPG) or the Court of Protection; (c) potential criminal prosecution for fraud or theft under the Fraud Act 2006 or the Theft Act 1968; (2) OFFICE OF THE PUBLIC GUARDIAN: the OPG investigates complaints about attorneys. The OPG can: (a) apply to the Court of Protection for the revocation of the LPA; (b) investigate the attorney's conduct and take formal action; (c) require the attorney to repay misappropriated funds; (3) COURT OF PROTECTION PROCEEDINGS: the donor's family or any concerned person can apply to the Court of Protection under MCA 2005 s.22 for: (a) revocation of the LPA; (b) an order that the attorney repays unauthorised gifts; (c) appointment of a deputy to replace the attorney; (4) GIFTING TO ONESELF — SPECIFIC RISKS: an attorney who makes gifts to themselves (including themselves jointly with others) is at particular risk. Even if the LPA was validly executed, self-dealing by an attorney is treated with great suspicion. Only gifts on customary occasions at not unreasonable amounts are permitted to the attorney; (5) PRACTICAL EXAMPLES OF UNAUTHORISED GIFTS: (a) Transferring the donor's house to the attorney's own name — clearly unauthorised and fraudulent; (b) Making regular large cash transfers to family members justified as 'IHT planning' — unauthorised without Court approval; (c) Using the donor's funds to pay the attorney's own debts — theft; (d) Taking an 'informal salary' for care work without authorisation — potentially unauthorised; (6) SAFEGUARDS: donors should consider: (a) appointing two joint attorneys so that no single attorney can act alone; (b) appointing a replacement attorney who is not closely connected to the primary attorney; (c) including in the LPA's preferences a statement of the donor's gifting intentions.

Whether and how an attorney can use the donor's IHT exemptions without Court of Protection approval is a nuanced area: (1) THE £3,000 ANNUAL EXEMPTION (IHTA 1984 s.19): in principle, an attorney can make gifts of up to £3,000 per tax year using the donor's annual IHT exemption — provided the gifts are: (a) to persons the donor has previously given to (or would be expected to give to); (b) on customary occasions; (c) at not unreasonable amounts given the estate size. However, using the annual exemption systematically as an IHT planning strategy (e.g. making £3,000 gifts to each of 10 family members each year) may go beyond the s.12 permission even if each individual gift is within the annual exemption. The spirit of s.12 is to allow modest gifts reflecting the donor's established charitable and family giving patterns — not to enable new IHT planning strategies; (2) NORMAL EXPENDITURE OUT OF INCOME — IHTA 1984 s.21: the 'normal expenditure out of income' exemption exempts regular gifts made from surplus income as part of the donor's normal expenditure pattern. An attorney who continues a gifting pattern the donor established before losing capacity — for example, paying monthly standing orders to children from pension income — may be maintaining the donor's normal expenditure and not making new gifts. This is a grey area: (a) if the donor had an established pattern, continuing it may be within the attorney's authority; (b) establishing a NEW pattern of gifts under the exemption would require Court of Protection authority; (3) SMALL GIFTS EXEMPTION — IHTA 1984 s.20: the small gifts exemption (£250 per recipient per year) may be used by an attorney for birthday and Christmas gifts to family members and friends — clearly within s.12 for most estates; (4) WHEN COURT AUTHORITY IS REQUIRED: Court of Protection authority is required for: (a) any gift that does not fall within the customary occasion/not unreasonable amount test; (b) gifts using the annual exemption beyond established patterns; (c) gifts structured primarily to avoid IHT rather than reflecting the donor's established giving; (d) gifts of property (land, significant personal property, investments); (5) BEST PRACTICE FOR ATTORNEYS: attorneys who are unsure whether a proposed gift is within their authority should: (a) seek written legal advice from a solicitor experienced in Court of Protection matters; (b) consider making an application to the Court of Protection for a specific gift authority; (c) not rely on 'common sense' or family consensus — the MCA 2005 test is a legal standard.

A donor can include guidance about gifting in the LPA's preferences and instructions section — but the scope is limited: (1) WHAT CAN BE INCLUDED — PREFERENCES: the preferences box in the LPA can record: (a) the names of people the donor regularly gives birthday and Christmas gifts to; (b) charities the donor supports; (c) the approximate amounts of gifts the donor normally makes (e.g. 'I usually give my grandchildren £50 each on their birthdays'); (d) the donor's wishes about IHT planning if it ever becomes relevant and can be authorised by the Court; (2) WHAT CAN BE INCLUDED — INSTRUCTIONS: instructions in the LPA bind the attorneys. However, an instruction that says 'my attorneys may make gifts of up to £10,000 per year to each of my children for IHT planning' does NOT validly expand the attorney's authority beyond s.12 — because s.12 is a statutory limit that the LPA cannot override. The instruction may guide the attorneys but cannot authorise what the statute prohibits; (3) THE INTERACTION WITH THE COURT OF PROTECTION: where a donor wants to ensure that large-scale IHT gifting continues after they lose capacity, the most robust approach is to make those gifts BEFORE losing capacity. Alternatively, the donor can make a statutory will or a settlement while they have capacity that puts their IHT planning into effect without requiring the attorney's authority; (4) EXPRESSION OF WISHES AND COURT APPLICATIONS: a donor can include an expression of wishes — 'I would like my attorneys to consider making IHT planning gifts of up to £X per year to my children if the Court authorises this.' This expression of wishes is not binding, but it provides evidence of the donor's intentions if the attorneys later apply to the Court of Protection for gift authority; (5) REVIEWING THE LPA GUIDANCE: the OPG guidance 'Making a lasting power of attorney' (LP12) and the accompanying guidance for attorneys ('Your role as a property and financial affairs attorney') explain the gifting limits. Attorneys should read this guidance carefully before making any gift on behalf of the donor.