Making lifetime gifts and settling property on behalf of P
Produced in partnership with Thomson Snell & Passmore
Making lifetime gifts and settling property on behalf of P

The following Private Client guidance note Produced in partnership with Thomson Snell & Passmore provides comprehensive and up to date legal information covering:

  • Making lifetime gifts and settling property on behalf of P
  • Settlements
  • A trust as opposed to the appointment of a deputy
  • Applications for the settlement of P's property
  • Gifts
  • Gifts for the purpose of inheritance tax planning
  • Application process for gifts

Settlements

Under section 18(1)(h) of the Mental Capacity Act 2005 (MCA 2005), the court has jurisdiction to approve ‘settlement of any of P’s property, whether for P’s benefit or for the benefit of others. As with the approval of statutory Wills, the approval of a settlement on behalf of P is a decision reserved specifically to the court and will never fall within the deputy's general authority to manage P's property and affairs.

When considering such an application, the court must be satisfied that P’s financial position will not be compromised in any way as a consequence of making the settlement. The court will consider P’s income and capital needs and will allow a generous contingency margin before deciding whether the proposed settlement is in P’s best interests.

The court may consider a settlement to be preferable in a number of circumstances:

  1. where P is a beneficiary under an existing Will, but may not require an absolute interest which will be charged to inheritance tax (IHT) on death. It may provide greater protection to P to vary the Will to create a new settlement on discretionary trusts, which names P as a discretionary beneficiary

  2. when P is a minor, a deputy cannot consider making an application for a statutory Will under MCA 20015, s 18(2). In situations where P’s life expectancy