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Beware Attorneys Bearing Gifts: Making Payments under a Power of Attorney

2018-07-04T21:40:22+00:00July 4th, 2018|News|

You could say there are two sides to acting as someone’s Attorney under a under a Lasting Power of Attorney (LPA). On the one hand, you have the authority to make very important decisions on that person’s behalf – something which could be critical if they are unable to do this for themselves. On the other hand, you have a number of responsibilities – such as the duty to act in that person’s best interests and not to abuse the powers you have been given.

Your friend or family member who has granted the LPA (generally called ‘the donor’ of the LPA) has placed lot of trust in you. The law recognises this and imposes strict duties upon you. If you fail to meet your obligations, there could be significant financial and legal consequences. Furthermore, ignorance of these duties is no excuse – all Attorneys are held strictly accountable. This makes it all the more important to be aware of what is required of you.

So how do you meet your obligations when you make a gift or payment on behalf of the donor? After all, in addition to Attorneys selling property (a topic we looked at here) this is perhaps one of the powers most open to abuse.

In this post, we provide a brief overview of your duties relating to payments and look at a recent case involving this issue.

Have you been granted the appropriate power to make a payment or gift?

Before looking at the duties themselves, it should be noted that the powers you have as an Attorney will depend upon the kind of LPA you have been granted. There are two different kinds:

  • Property and finance; and
  • Health and welfare.

Only a property and finance LPA will allow you to make gifts and payments on the donor’s behalf. If you have only been granted a health and welfare LPA, you will not have the necessary authority to make payments or take any decisions in relation to the donor’s financial affairs.

In many cases, however, both kinds of LPA are granted at the same time. It is important to check the terms of the LPA under which you act to determine the extent of the powers you have.

Your duties as an Attorney when making payments or gifts

Perhaps the most important duty you have as an attorney is the duty to act in the best interests of the donor. Therefore, any gifts or payments you make on the donor’s behalf must be in line with their best interests.

Although the idea of ‘best interests’ may sound straightforward, the simple name actually belies a more abstract concept. There are more things to consider than just what would benefit the donor; ‘best interests’ does not necessarily mean ‘self-interest’. Something you do on behalf of the donor to help other people can still be in line with the donor’s best interests. For example, by giving a gift to someone whom the donor could have been expected to provide for.

Attorneys can even make payments to themselves. However, as with all other payments they must be in the best interests of the donor. This can be difficult to determine and may cause a conflict of interests between the interests of an Attorney and the best interests of their donor.

The rules around gift-giving are much more restrictive than those relating to payments for goods or services. Gifts can be on occasions such as births, marriages, birthdays, or anniversaries etc., and only to those people who are closely connected with the donor. The amount should also be reasonable with reference to the circumstances of the gift and the means of the donor.

Background to the case

In the case of Re HH [2018] EWCOP 13, HH, a 95-year-old gentleman, was diagnosed with Alzheimer’s disease in 2010. His son, TH, had been appointed as his sole Attorney under an Enduring Power of Attorney (EPA), which covered property and affairs. The duties of an Attorney under an EPA are nearly identical to those under an LPA, so it is almost certain that the case would have been decided under the same principles had TH held an LPA instead.

HH’s condition and other health problems meant he needed constant care. TH took a very active role in this care over many years, frequently travelling from his home in Ireland to look after HH and becoming HH’s live-in carer for a time. It is clear from the judgment that TH sacrificed a great deal to look after his father. In August 2017, HH was reassessed and moved into a care home.

Over this period, TH made payments of almost £90,000 from HH’s account. The issue before the Court of Protection was whether to retrospectively approve the large number of payments made by TH on his father’s behalf.

Amongst the payments TH made from his father’s money were:

  • Care fees
  • A laptop and printer for himself
  • Fees for his son’s university halls of residence
  • A fishing trip with his son
  • A speeding fine incurred by TH
  • Business cards and art supplies
  • Dental treatment for himself
  • Household expenses of roughly £1,000 per month

TH accepted that he had basically treated his father’s bank account as though it were his own. He kept little to no records of the different payments he made from his father’s money. TH also incurred overdraft charges of over £2,000 on his father’s account because, by his own admission, he had not kept track of the money in the account.

The decision

Throughout her judgment, the judge noted that TH had barely concerned himself with his legal duties as Attorney. One example concerned the registration of the EPA. An EPA must be registered with the Office of the Public Guardian before it can be used. TH had not registered HH’s EPA until 2013, roughly 3 years after HH had been diagnosed with Alzheimer’s. TH had nonetheless made payments from HH’s accounts throughout that period.

The judge also noted TH had apparently given very little consideration to whether any action taken on his father’s behalf was strictly in his father’s best interests.

Although the Court accepted that TH’s lackadaisical attitude to money was one which he shared with his father, and – had HH been well – might have reflected the kinds of payments HH himself would have made, the judge held that the duties of an attorney placed a higher standard upon TH.

However, the judge found that the majority of payments could be justified as being in HH’s best interests, particularly during the period when TH was HH’s primary carer. The standard of care TH had provided was considered to be excellent and the judge acknowledged that as a full-time carer he should be entitled to some form of wage for the work he carried out.

As such, just under £73,000 was approved retrospectively. This left around £15,000 (plus roughly £11,000 which TH had dropped from the application himself). These were considered to be payments which TH should not have made on his father’s behalf.

To prevent further cost to HH’s estate, the Court ordered that the money should be deducted from TH’s share of HH’s residuary estate when HH died. If this share was not enough to cover the amount, the remainder would be considered as a debt TH would owe to HH’s estate. As we discussed in a previous post, it is possible to owe debts to a deceased relative’s estate.

How we can help

At Roche Legal, we are reassuring experts, who specialise in:

If you have any questions about this article, about your duties as an attorney, or you wish to make a Lasting Power of Attorney, please contact us.

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About the Author:

Rachel Roche
Rachel is a fully qualified Solicitor known for her personable style and strives to ensure that all of her clients receive a tailored and efficient service.
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