ITV’s recent documentary on Lasting Powers of Attorney raised a number of serious and very real concerns about how the powers contained in these documents are misused by unscrupulous attorneys. Unfortunately, many other considerate and caring attorneys also end up being caught out – completely by accident! Michael Brook from Lodders’ specialist Care and Capacity team explains how this can occur.
Consider this – a mother appointed her son to be her sole attorney under a Lasting Power of Attorney, or ‘LPA’, for property and financial affairs. Whilst the mother had capacity, she made a number of large gifts to the son and his children to help with their housing needs. A few years later, the mother sadly lost the mental capacity to manage her financial affairs, at the same time as her granddaughter was looking to purchase her first home. The son thought that as his mother had always made gifts to the grandchildren in order to help with their housing needs and because she was not in financial need for her care costs, he would transfer £25,000 to his daughter so that she could buy her first home. Whilst this may sound perfectly normal and reasonable to many people, unfortunately, the son had acted outside of his powers as an attorney (in the same way that many of those in the ITV documentary did). An attorney does not have the power to make such gifts without first obtaining the authority of the Court of Protection.
Whilst many people assume that an LPA or other power of attorney provides an attorney with an absolute right to manage a person’s finances as if the attorney had stepped into their shoes, unfortunately, this is not entirely true. Common and everyday transactions could easily result in repercussions if not dealt with correctly. ITV, whilst focusing on those who deliberately chose to defraud relatives, failed to address those who regularly break the law completely unwittingly due to a lack of understanding about how LPAs actually operate and what powers an attorney has.
An LPA, when used correctly, is an invaluable tool to assist those in need and provides a safety net that nothing else can replicate at a time of need. All individuals of any age should consider LPAs and whether further advice is needed (either if you are the donor or acting as an attorney).
If you would like more information or advice on LPAs, please contact the specialist Care and Capacity team at Lodders on 01789 206132 or by email.