Tax Planning and Lasting Powers of Attorney

In a recent decision the Court of Protection has confirmed that the authority granted by a Lasting Power of Attorney for property and affairs is not to be used as an instrument for Inheritance Tax planning for the donor’s estate.

There is an allowance for gifts of reasonable amounts on customary occasions.

An LPA cannot be used as a mechanism for making significant reductions to a donor’s estate to reduce the liability to Inheritance Tax on the donor’s death.

Where tax planning for the donor is desirable then it will be necessary for the attorney to make a further application to the Court of Protection for further authorisation.