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Advice to Attorneys and Deputies – exercise your powers “carefully and responsibly”

The Mental Capacity Act Code of Practice states at paragraph 7.58:  “An attorney takes on a role which carries a great deal of power, which they must use carefully and responsibly.”  A recent Court of Protection case highlights how seriously attorneys must take their duties.

In Re. OL reported on 24 June 2015 (http://www.bailii.org/ew/cases/EWCOP/2015/41.html) Senior Judge Lush found that a son and daughter appointed as attorneys under a Lasting Power of Attorney had “used their power carelessly and irresponsibly.”

Their misdemeanours included selling their mother’s property for £730,000, buying a new property for £430,000 with her money but only giving her a 20% interest in it worth £86,000.  The remaining 80% interest in the new property was divided between the attorneys equally, despite them not paying a penny towards it.  The daughter also pocketed most of the change from the downsizing to pay off her own mortgage (£127,885) and for building works to her property (£80,000).

In fact attorneys have very limited powers to make gifts of the donor’s property and money under Section 12 of the Mental Capacity Act as follows:

S12(2)(a) on customary occasions to persons (including himself) who are related to or connected with the donor, or (b) to any charity to whom the donor made or might have been expected to make gifts,

if the value of each such gift is not unreasonable having regard to all the circumstances and, in particular, the size of the donor’s estate.

(3)“Customary occasion” means—

(a)the occasion or anniversary of a birth, a marriage or the formation of a civil partnership, or

(b)any other occasion on which presents are customarily given within families or among friends or associates.

(4)Subsection (2) is subject to any conditions or restrictions in the instrument.

Case law has clarified that in some circumstances, it is possible for attorneys to give away up to £3,000 plus individual gifts of up to £250 per close family member / “connected” person per year without requesting Court authority.  However, this is only appropriate if the donor’s estate is sizeable and the gifts fall into the above categories.  It is therefore very important for attorneys to take advice on whether any proposed gifts are reasonable within the meaning of S12 Mental Capacity Act.

Chapter 7 of the Mental Capacity Act Code of Practice sets out attorneys’ duties, listing 10 duties, including:

  • Fiduciary duty: “attorneys must not take advantage of their position…[or] put themselves in a position where their personal interests conflict with their duties.  Decisions should always benefit the donor, and not the attorney.  Attorneys must not profit or get any personal benefit from their position, apart from receiving gifts where the Act allows it, whether or not it is at the donor’s expense.”
  • Duty to keep accounts: “If the attorney is not a financial expert and the donor’s affairs are relatively straightforward, a record of the donor’s income and expenditure (for example, through bank statements) may be enough.  The more complicated the donor’s affairs, the more detailed the accounts need to be.”
  • Duty to keep the donor’s money and property separate: “in most circumstances, attorneys must keep finances separate to avoid any possibility of mistakes or confusion.

Many attorneys do not seem aware of these obligations and the implications of getting things wrong.

In this case, the judge said the attorneys had proven themselves unsuitable to act for their mother by “taking colossal advantage of their position and obtaining personal benefits far in excess of the limited power that attorneys have to make gifts of the donor’s property under Section 12 Mental Capacity Act.”

Consequently, the judge revoked the Lasting Power of Attorney (because OL lacked capacity to do so herself) and decided that a panel deputy should be appointed.  The judge also directed that the attorneys should pay their own costs, contrary to the usual rule in property and affairs matters in the Court of Protection.

In an earlier case, Re GM, Judge Lush found that the deputies were personally liable to G’s estate and were ordered to repay £205,000.  The joint deputyship appointments were revoked. The judge ordered that somebody ‘with experience of unjust enrichment and restitution’ be appointed in their place. In other words, a professional deputy should be appointed who could take the necessary legal action against the former deputies to enforce the court’s order for repayment.

Ultimately in cases where an attorney or deputy has squandered money, a professional deputyship is likely to be required.  We can advise on when this may be appropriate and may be able to offer professional deputyship services where there is no conflict of interest.

It is important that family members, friends and care providers know that if they are concerned about the actions (or inactions) of an attorney under a registered power of attorney or deputy, they can ask the Office of the Public Guardian to investigate.

Equally, if you are a deputy or attorney and need advice on what gifting may be reasonable and whether an application to Court for authority may be required, we can advise to enable you to exercise your duties “carefully and responsibly.”

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