Acting as an Attorney or thinking of appointing one?

Since 01 October 2007 there have been two forms of Lasting Power of Attorney (LPA) – Property & Financial Affairs and Health & Welfare and the duties of the Attorney(s) are quite distinct.  You may be acting under an Enduring Power of Attorney (EPA), which were available pre-01 October 2007 and remain valid now, if properly executed.  Your duties and responsibilities under an EPA are the same as those for a Property & Financial LPA.  The only difference is that an EPA is valid without registration by the Office of the Public Guardian whilst the Donor still has capacity.

The following notes summarise the key duties and responsibilities of Attorneys and the Office of the Public Guardian has published a short guidance note as well.

Property and Financial Affairs Attorneys: duties

When you start making decisions as a Property and Financial Affairs Attorney, you’re responsible for managing things like the donor’s:

  • money and bills
  • bank and building society accounts
  • property and investments
  • pensions and benefits

Follow the donor’s instructions about what to do or, if they’ve lost capacity, check the LPA form to see if the donor has listed:

  • restrictions on what you can do
  • guidance on how they want decisions to be made

How to manage the donor’s finances

You must manage the donor’s finances in their best interests.

It is recommended that investment decisions are based upon the same criteria required of Trustees, which include:

  • taking proper advice
  • ensuring the suitability of any investments
  • ensuring the portfolio is adequately diversified
  • keeping the investments under review

See my more comprehensive blog on Trust Investment.

Keep the donor’s finances separate from your own, unless you’ve got a joint bank account or own a home together. If you do, tell the bank or mortgage company you’re acting as the other person’s attorney.

You must keep accounts of the donor’s assets, income, spending and outgoings. The OPG and the Court of Protection can ask to check these.

For Donors over the age of 80, who have lost capacity, the guidance in re Buckley should be followed, which basically precludes any new investment in asset-backed arrangements.

You may be prosecuted if you misuse the donor’s money.

Gifts

You have limited powers to buy gifts or give gifts of money on behalf of the donor, including donations to charities.

You must only make gifts:

  • to people who normally receive gifts from the person
  • on suitable occasions, e.g. birthdays, weddings, etc
  • to charities that normally receive donations from the person

Gifts must be reasonable – of a similar nature to the gifts the donor would habitually give – see my more detailed companion article.

Inheritance Tax planning

The first and key point to make in relation to Inheritance Tax (IHT) planning is that, by definition, it is outside of the scope of an LPA or EPA, because it is not strictly “in the donor’s best interest” – it is for the benefit of their beneficiaries only.

In any event, Inheritance Tax planning often involves making substantial gifts and those are clearly forbidden by the regulations. An application to the OPG to make substantial gifts, for IHT or any other purpose, is only likely to be successful if it can be clearly demonstrated that, “come hell or high water”, it wouldn’t affect the donor’s ability to maintain their desired standard of living.

Elsewhere, I have outlined how Business Property Relief (BPR) can be used to mitigate IHT, which involves investing rather than gifting. However, the risk profile of the investments necessary to establish BPR is such that they would probably fail the “suitability” test referred to above. In any event, are such investments “in the donor’s best interest” or are they really for the (potential) benefit of the beneficiaries? The purveyors of the various BPR schemes would have Attorneys believe that they are free to invest, but my strong advice is to seek the permission of the OPG before progressing.

Buying or selling property

You can buy or sell property on the donor’s behalf if it’s in their best interests.

You must contact the Office of the Public Guardian (OPG) if:

  • the sale is below the market value
  • you want to buy the property yourself
  • you’re giving it to someone else

The OPG can advise you on whether you need to apply to the Court of Protection about this.

If you’re selling the donor’s home and the donor has a Health & Welfare LPA, you may need to discuss with those Attorney(s) where the donor is going to live.

Health and welfare attorneys: duties

As a Health and Welfare Attorney, you can only make the following decisions if the Donor has lost capacity:

  • daily routine, e.g. washing, dressing, eating
  • medical care
  • living arrangements, e.g. whether they live at home or move into a care home

Check the LPA form to see if the donor has listed:

  • restrictions on what you can do
  • guidance on how they want decisions to be made

Decisions about where the donor will live

You can’t sell or buy property on the donor’s behalf unless you’re also their Property & Financial Affairs Attorney.

Decisions about treatment to keep the donor alive

You can’t make decisions about giving or refusing the donor treatment which will keep them alive unless they gave you permission in their LPA.

Advance decisions

The donor may also have made an advance decision, sometimes called a ‘living will’. This is a legal statement about which medical treatments they do not want. It’s not part of their LPA, but you’ll need to consider it as well.

You may need to apply to the Court of Protection to make a decision if:

  • the advance decision and the LPA give different instructions
  • there’s any doubt or disagreement about whether the treatment should be given

You can seek professional advice to help you with any of your duties.

What’s next?

If you are acting as an Attorney under a Property & Financial Affairs LPA or an EPA and you need help with managing the Donor’s financial affairs, speak to me today or complete the form below.




- Wills, Trusts and Lasting Powers of Attorney

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About Clive Barwell

Clive Barwell is one of the most experienced and qualified financial planners working in the later life market today, he specialises in advice and guidance for the over 55s. To ask Clive a question, please email him at info@clivebarwell.co.uk. Alternatively, you can follow Clive on Twitter, connect with Clive on LinkedIn or see Clive's profile on Google+.