Readers of this month’s newsletter will note Juliette Spanner’s article “What is mental capacity and how does it impact me?”, which refers to the The Mental Capacity Act 2005 (MCA).
All attorneys should familiarize themselves with the MCA in order to carry out their duties properly and effectively. It is very easy, when asked to act as an attorney, just to sign the Lasting Power of Attorney document (LPA) without thinking about the important task which potentially awaits you. However, some of the pitfalls are outlined below.
Read the LPA under which you are appointed
The LPA may set out the donor’s preferences: you should be aware of these and do your best to follow them, although they are not legally binding. Such preferences might, for example, include a wish that you should not dispose of any of the donor’s possessions during their lifetime.
Some LPAs contain instructions from the donor, and an attorney is legally obliged to follow these even if it is inconvenient to do so. For example, a donor may instruct that their house is not to be sold during their lifetime. An attorney would have to ensure that the house was not sold, even if the donor could not live there, and even if it was difficult to rent it out.
2. Check if you are appointed jointly and severally as an attorney, or jointly
This is an important distinction. If you are appointed jointly (either because the LPA says so, or because more than one person is appointed and the LPA is silent on the matter), then you cannot make decisions on your own. This is the case even if you have exhibited the LPA to an institution who have then, in error followed your instructions alone. Any transaction made by you alone, if in fact you are a joint attorney, may be set aside.
3. Beware of your limited power to make gifts
As a rule of thumb, as an attorney you can only make gifts of a size and at a time that the donor habitually made gifts. So for example if the donor regularly gave each grandchild £50 at Christmas then as their attorney, you can continue to do this, provided it does not impact on the donor’s finances in such a way that makes them unable to meet their financial obligations.
You cannot however decide that the donor could afford to give each grandchild £500 at Christmas, in the example above, and start to do that. If you want to use the donor’s money to make substantial gifts and/or for tax planning purposes you must seek the authority of the Court of Protection. Failure to do so risks the transaction being set aside, and/or your suspension or removal as an attorney.
4. Do not make loans from the donor’s money
The Court of Protection must ratify any proposed loan from the donor’s funds. It is not sufficient to justify lending money to someone on the basis that the donor will receive a much better rate of interest on the loan than they would obtain from a bank. The Court must assess the risk. The donor’s funds must be protected and available for their use at all times.
5. Reimbursing your expenses
Whilst you can reimburse yourself if, for example, you have done some shopping for the donor, you cannot choose to pay yourself for caring for them on one or two days a week, nor claim substantial travel expenses. You are not entitled to be paid for acting as an attorney, unless you are appointed in a professional capacity. Again, an application to the Court is required if substantial payment to an attorney are envisaged or required.
6. Maintaining accounts, and keeping money separate
You should not “add your name” to accounts in the donor’s name, as a joint owner. Any account or investment must continue to be made in the donor’s name. Your interest as an attorney should be separately noted on that account.
You must keep the donor’s money separate from your own so that at any time, you can account for all your dealings.
Get in Touch
If you have any concerns about exercising your duties as an attorney; or if you have concerns as to how an attorney is exercising their duties, please contact Hilary Buckle, partner in the Private Client department: [email protected]
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Get in touch
Hilary Buckle offers a fixed fee initial meeting of one hour to discuss your personal circumstances, your options and your next steps, at a cost of £95 (inc VAT).
Hilary specialises in all aspects of private client work, including Wills, trusts and probate matters. She is a member of the Thames Valley branch of the Society of Trust and Estate Practitioners, Solicitors for the Elderly (SFE) and an associate member of ACTAPS (the Association of Contentious Trust and Probate Specialists).
If you would like to know more or arrange a fixed fee appointment, please email her at [email protected] or call her on 0118 958 9711.