More and more people each year are choosing to sign a Lasting Power of Attorney (LPA), giving authority to others to deal with their property and financial affairs. Generally, the person making the power will often receive legal advice in order to ensure they understand the document and the power it gives.
The same cannot be said for the Attorney(s), who many will be unaware of exactly what they are becoming responsible for.
Tollers are increasingly seeing that this is causing problems later down the line for well-intentioned Attorneys and therefore we have put together a list of ten points that an Attorney needs to consider when acting on a person’s behalf under an LPA or an Enduring Power of Attorney (EPA).
1. The Person’s capacity
You should always consider whether the person can make the decision in question by themselves or whether they will be able to at any point in the future. This might change depending on the complexity of the matter or on the time of day and you should assist the person to make their own decisions where possible. Be aware that just because the person chooses to make an unwise decision, it does not necessarily mean that they lack capacity to make that decision.
Where the person is unable to make a decision and you have to make it instead, you should consider which is the least restrictive option for the person and also what is in the person’s best interests (see below).
2. Best interest decisions
Whenever you make a decision regarding a person’s financial affairs, you should ensure that the decision is made in their best interests. This means considering all the relevant circumstances and encouraging the person to participate as far as possible, as well as seeking the views of their family. You should also consider the person’s past and present wishes and feelings, their beliefs and values and any other factors they would weigh up if they were able.
3. Separation of funds
The general rule is that the person’s money should be kept separate to those of anyone else, including you as Attorney. This ensures that it is clear whose money is whose. There can be exceptions to this rule where there are good reasons, for example, where you are the person’s spouse and have always had joint bank accounts.
Where the person lacks capacity, you can make limited gifts on their behalf to family or friends on occasions such as birthdays, Christmas or weddings. You can also make payments to charities that the person might have supported if they had capacity. However, you should bear in mind what is reasonable and affordable compared to the size of the person’s estate.
If you want to make gifts outside of this scope, a Court application will be required to authorise the gifting.
5. Other gifting applications that may be required
Outside of the scope of the above, then Court permission will need to be obtained. For example, if you want to sell the person’s property under market value, buy it yourself, allow someone to live there rent free, give an interest-free loan from the person’s money or to sell property to the person’s family member or someone they know.
If the action taken by you will mean that the person will effectively lose money (e.g. not receiving rental income from someone living in their property or not receiving interest on a loan), or you are in a conflicted position when making that decision then authority will need to be obtained by the Court.
6. Family care payments
If you provide care for the person and need to receive a payment in return, an application must be made to the Court of Protection to authorise those payments. You cannot decide how much to pay yourself as this puts you in a conflicted position, being both the Attorney and the recipient of the care payment. The same rule will apply where a member of your family is the care provider.
7. Records and receipts
It is important that you keep accurate and detailed records and receipts of the financial decisions you make so that you can account for all money spent on the person’s behalf. You could be asked to produce accounts detailing what action you have taken and how you have dealt with the person’s money.
8. Payment of Lay Attorneys
You cannot be paid and cannot choose to pay yourself for the work done on the person’s behalf unless it states that you can in the LPA/EPA. You are not allowed to benefit from the role. However, it is possible to claim out of pocket expenses incurred when acting on the person’s behalf as long as appropriate receipts are kept and the amount claimed is in proportion to the size of the estate and the duties undertaken. Expenses incurred in relation to purely social visits will not be reimbursed, as they must relate to your role as an Attorney.
9. Delegation of decision making
You cannot generally delegate decision making to someone else where you have been appointed to make that decision, unless the decision is specifically authorised in the LPA itself (does not apply to EPA). It is possible to seek advice, for example from financial advisors or accountants, but the decision making power remains with you.
10. Your legal authority
If you are appointed as Attorney for property and financial affairs, you cannot make decisions which relate to matters outside of that remit, for example health and welfare decisions. There may well be an Attorney appointed under a Health and Welfare LPA, and if this is the case it will be helpful for you to consult with each other when making decisions which may overlap.
If in doubt, seek advice Talk to Tollers’ Elderly and Vulnerable Client Unit call 01604 258787.