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Where Taxpayers and Advisers Meet

Question on deed of variation

riccardob
Posts:105
Joined:Sun May 29, 2011 10:02 am
Re: Question on deed of variation

Postby riccardob » Tue Feb 07, 2012 7:43 pm

Hi Maths,

I was looking for the text where it states that a POA cannot be used to execute a DOV.
Can you provide the link or if possible explain the relevant clause. Personally I find it strange that a POA cannot be used
for this purpose but I am ignorant on these legalities.

Many thanks for your help

maths
Posts:8160
Joined:Wed Aug 06, 2008 3:25 pm

Re: Question on deed of variation

Postby maths » Tue Feb 07, 2012 8:34 pm

The text to which I referred does not explicitly state that a PoA cannot be used to execute a DoV.

What the text does is to identify the conditions under which a PoA can be used by the donee to make a gift.

I have just noticed that my earlier posting stated:

"In general the donee of an enduring power is not able to effect DoVs on behalf of the donor. This may only be done if the conditions laid down in MCA 2005 Sch 3 paras (2) and (3) are satisfied".

Should have read Sch 4 not Sch 3.

Also see MCA 2005 s 12 re lasting power of attorney.

riccardob
Posts:105
Joined:Sun May 29, 2011 10:02 am

Re: Question on deed of variation

Postby riccardob » Tue Feb 07, 2012 11:27 pm

The text to which I referred does not explicitly state that a PoA cannot be used to execute a DoV.

What the text does is to identify the conditions under which a PoA can be used by the donee to make a gift.

I have just noticed that my earlier posting stated:

"In general the donee of an enduring power is not able to effect DoVs on behalf of the donor. This may only be done if the conditions laid down in MCA 2005 Sch 3 paras (2) and (3) are satisfied".

Should have read Sch 4 not Sch 3.

Also see MCA 2005 s 12 re lasting power of attorney.
ok i have read these sections but I cannot see why a POA would not be suitable. Can you elaborate?

thanks

riccardob
Posts:105
Joined:Sun May 29, 2011 10:02 am

Re: Question on deed of variation

Postby riccardob » Tue Feb 07, 2012 11:30 pm

The text to which I referred does not explicitly state that a PoA cannot be used to execute a DoV.

What the text does is to identify the conditions under which a PoA can be used by the donee to make a gift.

I have just noticed that my earlier posting stated:

"In general the donee of an enduring power is not able to effect DoVs on behalf of the donor. This may only be done if the conditions laid down in MCA 2005 Sch 3 paras (2) and (3) are satisfied".

Should have read Sch 4 not Sch 3.

Also see MCA 2005 s 12 re lasting power of attorney.
ok i have read these sections but I cannot see why a POA would not be suitable. Can you elaborate?

thanks

12Scope of lasting powers of attorney: gifts.



(1)Where a lasting power of attorney confers authority to make decisions about P's property and affairs, it does not authorise a donee (or, if more than one, any of them) to dispose of the donor's property by making gifts except to the extent permitted by subsection (2). .
(2)The donee may make gifts— .
(a)on customary occasions to persons (including himself) who are related to or connected with the donor, or .
(b)to any charity to whom the donor made or might have been expected to make gifts, .
if the value of each such gift is not unreasonable having regard to all the circumstances and, in particular, the size of the donor's estate.
(3)“Customary occasion” means— .
(a)the occasion or anniversary of a birth, a marriage or the formation of a civil partnership, or .
(b)any other occasion on which presents are customarily given within families or among friends or associates. .
(4)Subsection (2) is subject to any conditions or restrictions in the instrument.

I think maths is referring to this section. But the issue here is that the donor is not the one who has the estate but only receives it from other person.
Is there a definitive answer to this question?

maths
Posts:8160
Joined:Wed Aug 06, 2008 3:25 pm

Re: Question on deed of variation

Postby maths » Wed Feb 08, 2012 12:03 am

Your query was:

c) can a deed of variation be drafted by person C on behalf of person A via power of attorney should person A be incapacitated.
Would not C as donee of the PoA be gifting A's property under the PoA to himself (ie C) or a third party?

If so s 12 is I think relevant.

servogleba
Posts:5
Joined:Fri Feb 03, 2012 7:58 pm

Re: Question on deed of variation

Postby servogleba » Wed Feb 08, 2012 7:03 pm

Op I am fraid that the info you are being given is incorrect.

Maths is basing his opinion on the fact that a DOV is essentially a gift but the fact remains that it is the deceased estate that is of concern here.
There is no rule which states that a POA cannot be used to produce a DOV.

I doubt anyone will find case law where a well written POA has been refused for the purpose of a DOV.

servogleba
Posts:5
Joined:Fri Feb 03, 2012 7:58 pm

Re: Question on deed of variation

Postby servogleba » Wed Feb 08, 2012 7:06 pm

"if the value of each such gift is not unreasonable having regard to all the circumstances and, in particular, the size of the donor's estate"

If the DOV covers a reasonable value in relation to an existing estate there is no issue with using a POA.

maths
Posts:8160
Joined:Wed Aug 06, 2008 3:25 pm

Re: Question on deed of variation

Postby maths » Wed Feb 08, 2012 8:31 pm

Maths is basing his opinion on the fact that a DOV is essentially a gift but the fact remains that it is the deceased estate that is of concern here.
It is not the deceased's estate which is of concern. The issue is whether the PoA permits a DoV to be executed by a donee of the PoA on behalf of the beneficiary (ie the donor of the power) who has inherited under the deceased's will.
There is no rule which states that a POA cannot be used to produce a DOV.
I agree in so far as I am unaware of one; but that is not the point. However, MCA 2005 s 12 does I suggest curtail the possibility. Your quote is incomplete; it should read:

"The donee may make gifts—
(a) on customary occasions to persons (including himself) who are related to or connected with the donor, or
(b) to any charity to whom the donor made or might have been expected to make gifts,

if the value of each such gift is not unreasonable having regard to all the circumstances and, in particular, the size of the donor's estate.

“Customary occasion” means—

(a) the occasion or anniversary of a birth, a marriage or the formation of a civil partnership, or
(b) any other occasion on which presents are customarily given within families or among friends or associates".
I doubt anyone will find case law where a well written POA has been refused for the purpose of a DOV.
Again, not the point.

As you appear to have experience in this area I would appreciate your thoughts on my comments.

maths
Posts:8160
Joined:Wed Aug 06, 2008 3:25 pm

Re: Question on deed of variation

Postby maths » Mon Feb 13, 2012 3:25 pm

I note servobleba has not responded.

The position is as i indicated above with respect to a Lasting PoA; see MCA 2005 s 12.

Whilst I did not explicitly state the position if s 12 cannot be satisfied the position is that the donee of the PoA cannot execute a DoV without the consent of the Ct of Protection where the donor has lost capacity.

Any execution of a DoV where the Ct's consent is required, but has not been obtained, will be simply invalid.


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