15 February 2013 by

Crocodile tears

The Court of Protection has recently decided an important case on the duties of an attorney who is managing someone’s finances under a Lasting Power of Attorney (LPA).

Miss Buckley had appointed her niece (C) as her sole attorney in September 2010. The LPA was registered in January 2011 and C began managing her aunt’s finances. The most significant decisions included the sale of a property and investment of the sale proceeds. By April 2012 there were concerns that C was not acting in her aunt’s best interests and was using the money to benefit herself. The Office of the Public Guardian started an investigation as by this time Miss Buckley no longer had the mental capacity to revoke the LPA.

The estimated loss to Miss Buckley’s estate was £150,000, including the use of £72,000 for C to start up a reptile breeding business.

The case of Re Buckley raises interesting issues both from the point of view of a person creating a LPA and of an attorney who has assumed the responsibility of managing someone’s financial affairs. The Court ordered that the LPA should be revoked to allow a Deputy to be appointed by the Court to manage Miss Buckley’s financial affairs. This is likely to include issuing proceedings against C to make good the loss to her aunt’s estate.

The basic premise, that the Court would intervene when an attorney exceeds their powers, is not remarkable. What is important is that Senior Judge Lush, in his judgement, sets out a summary of the factors an attorney should take into account when making investments of someone else’s money.

The key points are that:

1. The attorney cannot do as they please, nor can they do as the person who made the LPA (the donor) could have done with their own money. An attorney has fiduciary duties – essentially they must act in good faith and exercise care and skill when making decisions of this nature.

2. Attorneys should comply with the provisions of the Trustee Act 2000 (which imposes specific duties on trustees who are investing money) and follow an old Court approved guide for investing for people who lack capacity to manage their own affairs.

3. The donor’s money must be kept separate from the attorney’s money.

4. An application must almost always be made to the Court for permission to make gifts from the donor’s funds, or to use the funds in a way which benefits the attorney or the attorney’s family.

5. Ignorance of the law is not an excuse.

Clarification of an attorney’s duties when investing funds will naturally be relevant to any attorney under a LPA and should be borne in mind by a person making a LPA (along with clarifying the basic facts of the case and the risk of fraud). Does the person you wish to appoint have the necessary skill and acumen to be able to carry out their duties properly? Do you trust the person not to help themselves to your funds? Are there safeguards built in to the LPA, such as appointing more than one attorney? Would it be cost effective to appoint a professional attorney alongside family attorneys?

These questions and more should be carefully considered – after all, the LPA cannot easily be revoked or amended if you have lost the capacity to deal with your financial affairs.

If you would like to discuss making a Lasting Power of Attorney or if you are acting as an attorney and would like advice on your duties please contact Iain Aitken on 020 7288 4713.

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