Lasting powers of attorney (LPAs) enable thousands of vulnerable people to have their financial and other affairs managed by others whom they trust. However, as a High Court case showed,...Continue reading
If you accept appointment under a power of attorney, it is essential to understand the responsibilities this entails. A recent case shows what can happen if a less than thorough approach is taken.
It dealt with arrangements made by a 95-year-old widower now suffering from Alzheimer’s disease and resident in a care home.
He had given his younger son an enduring power of attorney (EPA) in 2006, which was registered in 2013.
The son acting as attorney under the EPA had for several years been his father’s full-time carer and had paid out of his father’s account sums totalling nearly £100,000 that were said to be for his father’s benefit, although about £11,000 of this was repaid. In addition, some £17,000 was paid out as gifts to family members. He went to the Court of Protection to seek retrospective approval for the payments and confirmation that he would not be personally liable for them.
The attorney’s elder brother opposed the application as regards the expenditure on behalf of their father.
The problem the attorney faced was that the law permits an attorney ‘to do on behalf of the donor anything which the donor could lawfully do by an attorney at the time when the donor executed the instrument’. The attorney may also apply funds for the benefit of others, but only within strict limits, and these must be relative to the size of the estate and any conflicts of interest must be avoided. Where a conflict of interest does exist, the attorney must apply to the court to approve the payment. Ignorance of the law is not accepted as an excuse for contravening it.
It is also permitted for attorneys to pay out sums for the care and maintenance of the person who made them attorney where doing so is required and is reasonable. In practice, this means that family members etc. may have their expenses met for providing care or services where this is a reasonable alternative to using professionals.
In this instance, the attorney had laid out substantial sums for which there was no clear need and had also paid large sums for his own benefit and that of his family. The judge commented that if ‘one took a step back and considered what the cost of commercial care would have been for this period of time, the amounts withdrawn by the First Applicant represent far less than might reasonably have been paid out…but I do not accept that on the face of it amounts paid out to an attorney up to a limit of a percentage of the cost of commercial care should be ratified without further consideration’.
Unfortunately for the attorney, he managed things in a ‘rather haphazard way’ and without any attempt at proper accounting, which made the judge’s task ‘incredibly difficult’.
Noting that a professional was to be appointed to act as attorney in future, the judge disallowed more than £20,000 of the expenditure and ordered that this amount should be deducted from the attorney’s share of the man’s estate when he dies.