We have written previously of the advantages in having a lasting power of attorney in place and not to rely on having the Court appoint a deputy to make decisions for you in the event that you lose the capacity to manage your own affairs.
Whilst this remains the case, it is worth remembering there are limits on what an attorney can do, and also to consider your own personal circumstances before deciding who you should appoint and what powers they should have.
All attorneys acting under a lasting power of attorney must act in the best interests of the person who granted that power of attorney, known as the donor. Attorneys have very limited powers to make gifts on behalf of the donor and any attorney must be aware of this and if necessary take appropriate advice. An attorney can, for example, make gifts on customary occasions such as birthdays and Christmas, but even so there is the condition that any such gift is not unreasonable having regard to all the circumstances and in particular the size of the donor’s estate.
If the attorney is minded to make a gift which they feel is in the donor’s best interests but falls outside the scope of their powers, they would need the express, prior approval of the Court to proceed. This applies to whether the gift is to a family member or not and regardless of the purpose of the gift, for example inheritance tax planning.
The choice of who to appoint as attorney is clearly very important, but even where an appropriate person is chosen, problems can still arise. It is often the case that parents lend money to their children, perhaps to help them on the property ladder. This could cause a conflict of interest if, at a later date, the loan is outstanding and the child is acting as attorney for the parent.
Again, an application to the Court may be required to enable matters to proceed but this can cause delays and incur costs. With this in mind, it is often best to try and anticipate these sorts of difficulties by appointing different people as attorneys so that conflicts of interest are far less likely to arise.
Cases of abuse by attorneys are, sadly, not unknown and the donor could seek to protect themselves by including suitable instructions in their lasting power of attorney. For example, they could state that the attorney must provide accounts to a specific person, so that financial irregularities can be picked up. Of course, there could be cost implications for arrangements such as this and everyone’s circumstances are different, but even so those looking to grant lasting powers of attorney, and those who have granted them already, should consider how best to structure their powers of attorney. There is much to be said in keeping things simple, after all the whole idea behind a lasting power of attorney is to enable the donor to appoint someone they trust to manage their affairs and not to create practical difficulties for the attorney to overcome. Even so, lasting powers of attorney need to be carefully considered and updated if needed.