Can a power of attorney create a trust?04 December 2014
For adviser use only.
In general, attorneys have very limited powers to make gifts out of the donor’s property. This is because the main purpose of an attorney is to look after and manage the financial affairs of the donor rather than dispose of it.
Both Enduring Powers of Attorney and Lasting Powers of Attorney provide the attorney with limited powers to make gifts out of the donor’s property. The Enduring Powers of Attorney Act 1985 (s3) and Mental Capacity Act 2005 (s12) both state that gifts may be made on customary occasions to persons related to or connected to the donor. Customary occasions are defined as anniversaries, birthdays or marriage. Gifts to charities that the donor would have expected to make would also be possible. This is subject to any conditions or restrictions in the deed.
Generally, in the case of larger gifts and IHT planning , the attorney must apply to the Court of Protection for approval in advance.
In Scotland the Continuing Power of Attorney document can include powers to allow trust and IHT planning. If this is not the case, the attorney must apply to the Office of the Public Guardian (Scotland) for approval.