An attorney paid himself how much!

A recent case made for a good headline, but actually the decision was sensible in the unusual circumstances that applied in the case.

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We have seen before how important it is for a person who might be frail or in need of assistance to appoint an attorney. 

As the Government website reminds us:

'A lasting power of attorney (LPA) is a legal document that lets you (the 'donor') appoint one or more people (known as 'attorneys') to help you make decisions or to make decisions on your behalf.

This gives you more control over what happens to you if you have an accident or an illness and can't make your own decisions (you 'lack mental capacity').

You must be 18 or over and have mental capacity (the ability to make your own decisions) when you make your LPA.

You don't need to live in the UK or be a British citizen.

There are 2 types of LPA:

  • health and welfare
  • property and financial affairs

You can choose to make one type or both.'

An attorney takes on significant responsibilities including following the donor's instructions, helping the donor make their own decisions if they can and making decisions in the donor's best interests. In deciding what might be in the donor's best interests, the attorney must take into account what the donor would have decided and the past and present values of the donor including moral, political and religious views. The attorney cannot profit from their appointment.

A recent case made for a good headline, but actually the decision was sensible in the unusual circumstances that applied in the case.

In the case, a 72-year-old woman appointed her son to be her attorney. She had dementia and could not handle her own affairs. Her son made an application to the court to be permitted to make gifts out of her estate totalling £7m. What prompted comment is that he proposed that £6m of those gifts be paid to him.

The reason for proposing the substantial gifts was that if the mother survived for long enough, the gifts would result in a very significant saving of around £3m in Inheritance Tax payable on her death.

The attorney also argued that the gifts reflected his mother's wishes and she also had a considerable remaining estate left of some £10m which would more than adequately meet her needs.

The Judge accepted these arguments and agreed that the proposed gifts out of the estate of £7m could be made.

Most people do not have multi-million-pound estates to distribute. However, the case does provide an important reminder of some key principles:

  • if an attorney wants to take a step that might benefit the attorney or is a difficult decision, best advice is for the attorney to make an application to the court to determine the issue
  • the actions of attorneys can be checked and challenged so such a step is important to protect the attorney

If you would like to consider making a power of attorney, or you are an attorney and are facing difficult decisions, contact us.

Members: Simon Shaw, Elizabeth Rimell and Janice Leyland.
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