Understanding the Role of An Attorney
Agreeing to be an Attorney for someone is an important and responsible role. Yet, we find far less information readily available to help Attorneys understand what they are agreeing to than there is about the importance of setting up a Lasting Power of Attorney (LPA).
The role of an Attorney can’t be underestimated. If you’re being asked to become an Attorney, or are in the process of asking friends or family to become your Attorney, then join our expert Later Life team – on Tuesday 1 March at 12.30pm – who are hosting a webinar to help you understand the role in further detail. Click here to register
So, what should you consider when acting as an Attorney?
22nd February 2022
Andrew Page See profile
The LPA appoints a trusted person to manage someone’s affairs in the event they are mentally or physically incapable of doing so.
There are two types of Lasting Powers of Attorney (LPA) for the following:
Property & Financial Affairs (P&FA) LPA
Health & Welfare (H&W) LPA
We recommend both, but this article only covers Property & Financial Affairs for brevity.
A Lasting Power of Attorney is made by a person called the donor and gives you (the Attorney) power to deal with their financial affairs. Some steps to consider:
· An important first step is to talk to the person appointing you about why they have chosen you and what they expect of you. This reflects our previous “GETSET” article
· After the document has been prepared, have a good read of it. Read everything, not just the boxes that have been filled in – be sure all your details are correct from the start as you will need to verify your identity in the future if the LPA is used
· You must only do such things as the power allows you to do
· You can’t delegate the role to another person
· A Property & Financial Affairs LPA doesn’t give you the power to make health or welfare decisions such as what medical treatment they should have or where the donor should live. This would be covered by a separate Health & Welfare LPA
· If you’ve been appointed with another person, check whether you must deal with all matters together (a joint appointment) or if you can act together or independently (joint and several appointment). Some LPAs allow joint attorneys to make some decisions together and some independently (a hybrid appointment). This is detailed in the document.
Most LPAs are registered as soon as they are made, as they can’t be used until registration is complete. As this can take some time, it’s sensible for this to happen straight away so the LPA can be kept safe for use, should it be required in the future.
· If there are no conditions or restrictions preventing you from acting at this point, you may use the power immediately
· You should only do what the donor wants you to do and always act in their best interest – see below for more information
· Suppose there’s a condition in the power which prevents you from using the power until the donor is mentally incapable of managing their financial affairs. In that case, you will usually need to produce evidence of the donor’s incapacity to third parties, such as banks and building societies to accept your authority.
Please speak to one of Old Mill’s Later Life team for more help on this aspect if required.
When acting under the LPA, you must follow the principles set out in the Mental Capacity Act. This means:
· You must assume that the donor can make their own decisions unless it’s established that they cannot because they lack mental capacity
· You must help the donor to make as many of their own decisions as possible
· You must not treat the donor as unable to make a decision unless all practical steps to help them to do so have been made without success
· You must not treat the donor as unable to make the decision in question simply because the donor wishes to make a decision you consider is unwise
· You must make decisions and act in the donor’s best interests when they are unable to make the decision in question
· Before you make a decision or act, you must consider whether you can do so in a way that is the least restrictive of the donor’s rights and freedom but still achieves the purpose.
· The principles outlined above are very important, and failure to adhere to them could lead to your removal as an Attorney.
Decisions as to what is and is not in the donor’s best interest aren’t always easy, and you must consider all the relevant circumstances, including:
· The likelihood of the donor recovering in the foreseeable future and being able to make the decision themselves
· Involving the donor in the decisions, so far as practical
· The donor’s past and present wishes and feelings, beliefs, and values
· Other factors that the donor would be likely to consider if they were able to do so
· If practical and appropriate, consult with carers, relatives and/or friends.
The donor may have included restrictions or conditions in the power, limiting you from making gifts. If this isn’t the case, then there is clear guidance on what is and isn’t acceptable:
· You may make gifts on customary occasions, such as Christmas, birthdays, and weddings provided it’s for a friend or relative (including yourself)
· Gifts can also be made to a charity if the donor has made gifts to the charity in the past or might be expected to make gifts to the charity
· In all cases, the size of the gift must be reasonable and in relation to the size of the total value of the donor’s assets
· You should ideally be aware of the content of the donor’s will to ensure that any gifting does not affect the provisions of this
· Bear in mind whether the donor might need the asset for their own use in the future, e.g., to fund care and outgoings
If you have any doubts or wish to make gifts not covered by the above, you should seek professional advice.
Banks and other financial institutions have different ways of dealing with Attorneys. Some will allow you to continue to operate the donor’s account. Others will wish a new account to be opened. Many financial institutions allow jointly held accounts to operate as normal once the power has been registered with them. Most will have their own requirements for registering the LPA, so it’s worth checking the requirements before the LPA becomes necessary.
· If you operate an account for the donor, you should sign your usual signature and then add underneath your signature the words ‘as attorney’
· If you have to open a new account, it should be opened in your name ‘as attorney for’ the donor
· You shouldn’t open an account in your name without identifying that the asset belongs to the donor, as this may cause complications with your own financial affairs
· You can’t continue or open an investment account that is managed on a discretionary basis unless the LPA specifically allows this, as this would fall foul of the “no delegation” rule mentioned above. The following wording should be included in the instructions section:
‘My attorney(s) may transfer my investments into a discretionary management scheme. Or, if I already had investments in a discretionary management scheme before I lost the capacity to make financial decisions, I want the scheme to continue. I understand in both cases that managers of the scheme will make investment decisions, and my investments will be held in their names or the names of their nominees.’
The power may include a condition that you prepare and produce accounts every year to be checked by someone, such as a solicitor or an accountant. Even if the power doesn’t say this, you still have a duty to keep accounts. It’s sensible to keep financial statements and retain all receipts in one place. This is because the Office of the Public Guardian could ask you to account for your dealings with the donor’s money.
· You must act with honesty, integrity and in good faith
· You must keep the donor’s affairs confidential, unless you are legally required, such as a request from the Office of the Public Guardian, an order from the Court or if there is good reason to disclose it
· You must not benefit from your position, even if you believe the donor would usually agree to it
· You must act using reasonable standards of care and skill
· You should consider taking specialist independent financial advice on how best to invest and hold funds belonging to the donor.
An Attorney isn’t allowed to be paid unless the donor has authorised it in the LPA. However, you can recover reasonable out of pocket expenses, and in most cases, this is unlikely to exceed more than a few hundred pounds a year.
If you no longer wish to act as an Attorney in the future, you may retire from your appointment by completing a form and sending it, with the original LPA, to the Office of the Public Guardian.
Most Attorneys undertake their role diligently, and no doubt you will do likewise. As an ultimate safeguard for the donor against poor decision making, the Court of Protection can remove an Attorney who it finds has not acted in the donor’s best interests. If the Attorney’s actions have resulted in financial loss, the Court can order the Attorney to reimburse the donor’s estate to the extent of the loss.
Acting as an Attorney is an important role, that comes with a lot of responsibility. We, therefore, encourage the donor to be open about their financial affairs with their Attorney/s. We encourage Attorneys to instigate these conversations with the donor so that they are as prepared as possible should health suddenly decline. We recognise that these conversations are not always easy to have, and we can help guide you through this to ensure the best possible outcome for all concerned.