Capacity to Gift Assessments

When is an assessment of mental capacity to make lifetime gifts needed?

Where there is doubt as to a person’s mental capacity to make a gift, or where they may have a cognitive impairment present as a result of a diagnosis such as dementia, stroke or brain injury, a solicitor may advise that a mental capacity assessment should be completed to determine whether the person can make a gift. A solicitor might also advise that a mental capacity assessment be completed even in some cases where there is no obvious cognitive impairment but where a person’s gifting might be viewed as highly contentious or at risk of a legal challenge.

Additionally, assessments of mental capacity to make lifetime gifts are required where a person lacks capacity to manage their property and financial affairs and has made a Lasting Power of Attorney (or an Enduring Power of Attorney) to appoint Attorneys to act on their behalf in such circumstances. If an Attorney wishes to make a gift on behalf of the Donor, there are limitations as to how they can exercise their duties. The Attorney would need to apply to the Court of Protection if they wish to make a substantial gift on behalf of the Donor and this will always require an assessment of the Donor’s capacity to make a lifetime gift, which would form part of the Court of Protection application.

Why do TSF Assessments require instruction from a solicitor prior to completing an assessment of mental capacity to make lifetime gifts?

It is becoming increasingly common for people to make lifetime gifts (which could be property, monetary, or gifts of shares) to family or people close to them. Such gifts can be of enormous benefit to the recipient, for example, to a younger person wanting to purchase property or invest in a new business venture. Gifting assets in your lifetime, rather than leaving everything to be distributed amongst beneficiaries as part of your estate upon your death, can also serve to reduce inheritance tax.

Making a Deed of Gift is a way of legally transferring money or shares to another person, or adding that person to your property deeds. It is highly advisable to write a deed of gift prior to making substantial gifts, particularly where making such a gift might be contentious or result in a legal challenge. Whilst making a Deed of Gift can be done without the help of a solicitor, in practice it is best to seek their advice and expertise, to ensure that the resulting document is as robust as possible. Solicitors will also be able to advise on whether making a particular gift might be viewed as intentional deprivation of assets.

TSF Assessments Ltd are regarded highly in legal and financial sectors as producing thorough and robust mental capacity assessments in respect of gifting. There are some mental capacity companies who accept instructions directly from private clients without the involvement of a solicitor. However, at TSF, we recognise that gifting can not only be contentious but occasionally a vehicle for financial exploitation or abuse and undue influence from potential recipients can also be a concern. As part of our due diligence therefore, we always ask for the instruction for capacity to gift to come from a solicitor.