The appointment of a person as Power of Attorney (whether for Property and Finance or Health and Welfare) is seen as a sensible act. As we get older, appointing a trusted person to act on our behalf in the event we are unable to is prudent future planning.
Often, though, Attorneys are not aware of the nature and extent of their powers and take steps – albeit well meaning ones – that breach their duties. Recently just such a situation has landed an Attorney in hot water and resulted in their acts coming to the attention of the Court.
Attorneys are only able to make gifts on behalf of the Donor of the power if they comply with the requirements of the Mental Capacity Act 2005. Gifts that are authorised will be
- Given on customary occasions such as birthdays, Christmas, weddings and anniversaries
- Given to someone related or connected to the person or a charity that they have previously supported and
- Of reasonable value, taking into account the Donor’s estate and relevant circumstances
If a gift is to be made that falls outside the scope of these gifts then approval from the Court of Protection is needed. An Attorney who goes ahead regardless risks the “gift” being undone and an application being made for their removal – with the risk that they are also ordered to pay the costs of that.
Anyone who is appointed as Attorney must understand the nature and extent of their powers. An Attorney’s obligations centre around good faith and confidentiality. There is a useful guide to what an Attorney can and cannot do at https://www.gov.uk/lasting-power-attorney-duties
Attorneys should ensure that they keep their funds and assets completely separate from those of the Donor and that they keep careful records to show the transactions that they make (and the reasons for those).
Sometimes challenges to the actions of an Attorney can be made many years after the transaction itself – often such things do not come to light until the Donor dies and Executors or beneficiaries question where assets have gone. In such circumstances, the Attorney’s records will help to explain what has been done.
In some cases, however, no explanation will satisfy the enquiry.
Our Team have seen instances where an Attorney – with no intention of doing wrong – has made a “gift” of land to a family member believing that to be what the Donor “would have wanted”. Such would require Court of Protection approval as it is outside the scope of the “usual” gifts the Donor would be expected to make.
In the recent case of Chandler v Lombardi the Attorney was one of the Donor’s four children. The Attorney had transferred a property owned by the Donor into the joint names of the Donor and the Attorney. This effectively gifted 50% of the Donor’s interest in the property to the Attorney.
This gift did not meet the test set out in the Mental Capacity Act and the Attorney had not obtained prior authority for the transfer. As a result the transfer into joint names as tenants-in-common was declared void and an Order was made by the Court that the property Register be rectified accordingly; undoing the transfer.
If you think that an Attorney has done the wrong thing it is important to look at all the facts and to gather as much information as possible about what has been done. Gifts to family members or friends of the donor that coincide with previous gifts and obvious special occasions are unlikely to be open to challenge.
Larger gifts and gifts that are outside the scope of what might be considered “usual” may be called into question, as might “sales” of assets at less than market value. This is true especially where a family member is permitted to acquire an asset at less than its full value.
The risk of getting it wrong is that transactions are undone and any loss to the Donor’s estate (or costs of putting things right) are borne by the Attorney personally, from their own funds, not those of the Donor.
If you are worried that someone has acted improperly under a Power of Attorney our Team can review things for you and advise whether or not a challenge to the actions of the Attorney might be reasonable.
Our experienced team at Howes Percival can assist on all aspects of Contentious Trusts and Probate. For more information click here.
The information on this site about legal matters is provided as a general guide only. Although we try to ensure that all of the information on this site is accurate and up to date, this cannot be guaranteed. The information on this site should not be relied upon or construed as constituting legal advice and Howes Percival LLP disclaims liability in relation to its use. You should seek appropriate legal advice before taking or refraining from taking any action.