Think carefully before deciding to grant power of attorney
LASTING Power of Attorney (LPA), allows you to appoint someone to make decisions on your behalf should you become incapable of doing so, and it is not something that should be taken lightly.
Sheffield-based Oxley & Coward Solicitors LLP is advising people considering LPA to seek professional advice, as recent cases demonstrate that the wrong choice of attorney, or leaving the decision too late can have far reaching consequences.
LPAs or EPAs (Enduring Powers of Attorney) are registered at the Office of the Public Guardian (OPG) and a recent case (Re Buckley) before Senior Judge Lush of the OPG highlights some of the dangers an illadvised, hasty appointment of the wrong attorney can all too often lead to. Even those with the best intentions do not always understand their duties, while at the worst, you risk providing the unscrupulous with a blank cheque book to make free with your money.
In Re Buckley, the LPA was revoked by the Judge (after the LPA donor lost their capacity to make decisions) after the appointed attorney (her niece) invested nearly £90,000 of the donor’s money in a risky reptile breeding business and had taken nearly £45,000 of the donor’s capital too.
“The most important obligation of an attorney is to act in the donor’s best interests,” said Oxley & Coward expert Caroline Carter. “Judge Lush clearly felt this was not the case here and while the LPA was revoked, the damage by this stage can already have been done.”
Judge Lush said there are: “two common misconceptions when it comes to investments. The first is that attorneys under an LPA can do whatever they like with a donor’s funds.
“And the second is that attorneys can do whatever the donors could – or would – have done personally, if they had the capacity to manage their property and financial affairs.”
The donor in this case may or may not have wanted to invest in this way but the point is, it is the attorney’s job to act in the donor’s best interests and a risky investment in reptile breeding could hardly be described as such. Judge Lush gave some further useful advice that it is worth quoting in full:
“The donor’s money and property should be kept separate from the attorney’s own – or anyone else’s. So far as practicable, any investments should be in the donor’s own name.
“A specific application to the OPG should be made if the attorney wishes to: make a loan to the attorney or member of their family; make an investment in the attorney’s own business; enter into a transaction for the donor at less the market value; or to enter into any other arrangement where there is a ‘conflict of interests’ between the donor and the attorney.”
“While much of this is good common sense, appointing the right person to be your attorney if you are considering an LPA in the first place is essential,” said Ms Carter. “A solicitor’s experience can prove vital in guiding you through the decision making process on your choice of attorney, their powers and preparing and registering the LPA.”
The wrong choice can lead to many of the issues described above, not to mention family feuds. Choosing a potential attorney needs careful consideration. It must be someone you know well and trust to act in your best interests. Leave it too late and your affairs may have to go through a Court of Protection deputyship, but act in haste and you risk giving someone unwilling or unsuitable a carte blanche with your money.
“While thinking about your needs, it can be all too easy to forget to take the needs of the person you wish to appoint into account too,” added Ms Carter.
“Will they be happy to undertake the role, do they know and understand your wishes, and are they good at looking after their own affairs?”