If you’re an attorney under a property and financial affairs Lasting Power of Attorney (‘LPA’) you have been entrusted with the power to make all financial decisions on behalf of that person (the ‘donor’). However, of course, with great power comes great responsibility.
As an attorney you must be aware of, and only do, what the LPA allows you to do:
- The LPA can only be used once registered with the Office of the Public Guardian and there are no other restrictions within the LPA which prevent you from acting;
- If the donor has capacity, you should only do what they want you to do;
- If the LPA is limited, so that you can only use it when the donor is mentally incapable of managing their financial affairs, you will need to provide evidence of the donor’s incapacity before you can use it;
- If there is another attorney, you may have to deal with everything together (if appointed jointly) or you may act together or independently (if appointed jointly and severally);
- You can only make gifts on behalf of the donor on customary occasions, for example birthdays, provided it is to a friend or relative. Gifts can also be made to charity if the donor previously made gifts to that charity or, if not, in the circumstances they might be expected to make gifts to the charity. The size of any gift must be reasonable in the circumstances and in relation to the size of the donor’s assets. You should obtain a copy of the donor’s will to ensure you do not interfere with the donor’s intended distribution of their estate;
- You can use the donor’s money to maintain their spouse, civil partner, cohabitee or child (if under 18) subject to any payment being reasonable in the circumstances and affordable for the donor.
- You should keep financial statements and retain all receipts because you could be asked to account for your dealings with the donor’s money.
- You must not use the donor’s money or property for your own benefit for example, as a loan. This would need to be authorised by the Court of Protection.
- You should consider taking independent financial advice on how to invest and hold the funds of the donor.
- You cannot be paid for acting as an attorney, unless the donor has authorised it in the LPA. You can recover reasonable out of pocket expenses that have been personally incurred.
- You must follow the principles of the Mental Capacity Act 2005 and the Mental Capacity Act code of practice. The code of practice can be viewed here:
The key principle is that you must make decisions and act in the donor’s best interests when they are unable to make the decision in question.
If you are in any doubt as to your responsibilities, or whether you can make a particular decision, then it is best to seek legal advice.
For further information please contact Laura Morse at Ashfords LLP on l.morse@ashfords.co.uk or 01884 203054.
