Posted by Trish Watkins, Associate
Lasting Powers of Attorney – How to avoid misuse
The Office of the Public Guardian is dealing with an increasing number of Lasting Powers of Attorney applications for registration. Unfortunately, there will always be cases of misuse and abuse where trust is involved. Here are steps that can be taken to minimise the risk of misuse or abuse if you make a Lasting Power of Attorney.
A Lasting Power of Attorney (LPA) is an extremely powerful document. There are two separate types of LPA – Property and Financial Affairs and Health and Welfare. The person making the document (the donor) appoints someone they trust (attorney) to deal with either their property and financial affairs or decisions about their care and treatment in the event that they are unable to deal with matters.
It therefore follows that careful consideration should be given as to who should be appointed as an attorney.
What is the purpose of a Lasting Power of Attorney?
The purpose of the Lasting Power of Attorney is often misunderstood. The donor has decided in advance who should act for them in the event that they are no longer able. However, most Property and Financial Affairs LPA’s will also authorise an attorney to act for a donor whilst they still have mental capacity (eg. if they were simply physically incapable) provided they give consent.
The donor should be aware that they can revoke either type of LPA even after it is registered provided they retain mental capacity. If they are concerned that the attorney is acting inappropriately then revocation is certainly an option.
Most importantly, mental capacity is an issue and time specific so it depends on what decision needs to be made at the time. Where a donor’s capacity fluctuates the attorney should encourage them to make as many of their own decisions as they can rather than simply taking over. (The LPA for Health and Welfare is different because it can only be used when the donor is deemed to have lost mental capacity).
How do I choose the correct attorney?
The crux of the matter is that you should only appoint someone you trust as your attorney. This could be a friend, family member or someone neutral such as a firm of solicitors. However, whilst we would all hope that we can trust a family member or a long-standing friend, issues can arise particularly where money is involved. The question you need to ask yourself is “Is this person the right person for this role and are they able to handle my affairs in the way I would expect them to?”. It might be that the person is terrible with money or clearly unable of dealing with health and welfare decisions. If that is the case then they are not the right person to act as attorney.
When an attorney takes on the role their position becomes fiduciary in nature. That is, they hold a position of trust and responsibility and are under a duty to act in the donor’s best interests. This can sometimes cause “blurred lines” with family relationships and it is important that the attorney fully understands what their role entails to prevent misunderstandings arising in the future.
Many reports of misuse of LPA’s centre around children acting as their parents’ attorneys and not fully understanding their duties and responsibilities. For example, an attorney might give himself a large gift of money from the donor’s funds (his mum) because he needs it for a house deposit and he genuinely believes that if his mum was mentally capable she would have wanted him to have it. In fact, an attorney should be aware that such a gift would need to be authorised by the Court of Protection first and in many instances would not be allowed.
If an attorney acts inappropriately there is a risk that they could be removed from their role. If they are the donor’s only attorney this would invalidate the LPA and the donor would be left without anyone legally authorised to look after their affairs. The Court of Protection would have to become involved which would be a lengthy and potentially expensive course of action. In some cases the Court can order that the attorney repays the donor’s estate.
What safeguards can I include in my LPA?
The LPA document offers the donor the opportunity to appoint both original and replacement attorneys. Therefore if the original attorneys are permanently no longer able to act the replacements can take on the role. It is worth noting that additional attorneys cannot be added to the LPA retrospectively so wherever possible a donor should have at least two attorneys.
A choice is available for a donor as to how he appoints his attorney(s) – solely, jointly, jointly and severally or a mixture of the two. There are pros and cons with each but it will depend on the circumstances as to which option is chosen.
A donor is able to put in place measures which will offer him further protection against the document being used inappropriately. Everyone’s situation is different and there will be plenty of donors who are able to appoint their attorney without any problems. Those donors might well be happy to give their attorney unfettered authority to act on their behalf and of course it is only right that they should have that option.
However, in some cases it might be prudent to include safeguards to cover certain situations. The donor can include preferences and instructions for their attorneys within the LPA. Preferences are not binding on an attorney but they are an expression of the donor’s wishes and so should certainly be taken into account.
Instructions, however, are binding on the attorney provided they are valid. Great care needs to be taken to ensure that any instructions are unambiguous and within the authority of the attorney. For example, a donor might wish his attorney to provide an annual set of accounts to a trusted accountant so that they can independently check that all is in order. If it wasn’t and they couldn’t be satisfied as to the reasons for that then a flag could be raised with the Office of the Public Guardian.
Many of the issues surrounding misuse of an LPA are connected to misunderstandings about the role of the attorney. This is why it is vital that a donor not only agrees any proposed appointment with the attorney but that they are fully appraised as to what the role involves. It is far better for a proposed attorney to decline the role than for the LPA to be needed and for the attorney to disclaim at that point by which time the donor has lost mental capacity and cannot make a new LPA.
What benefit is there for me in instructing a solicitor to deal with my Lasting Powers of Attorney?
The value of taking legal advice in relation to Lasting Powers of Attorney centres on fully understanding the nature and extent of the document, how each document is to operate for the donor depending on their circumstances including the use of safeguards, the role of the attorney and the restrictions on them e.g when making gifts on behalf of the donor.
If you have any enquiries, please contact Trish Watkins on:
01793 847 761 Email us