Powers of Attorney – Beware of a Wolf in Sheep’s clothing
LPAs were introduced in 2007 and had some marked differences with their predecessor, the Enduring Power of Attorney (“EPA”). LPAs had several safeguards and protections for the person creating them (the “donor”) which EPAs did not. By 2007, there was a widely shared concern that it had become too easy for an attorney under an EPA to act improperly. LPAs introduced various safeguards to address this. For instance, the donor could include restrictions as to what their attorneys could do, perhaps how and when they could act; and that an independent person had to speak with the donor and confirm that he or she understood what they were doing and was not being improperly pressured into creating the LPAs.
Many solicitors working in this area feel these safeguards are being eroded and so unfortunately it is not surprising to see such a sharp increase in investigations. Some, of course, will amount to plain financial abuse and fraud. But it is possible that many of these actions under investigation may prove to be unlawful but innocent on the attorney’s part, as they did not understand the limitations on what they can do.
For instance, we have come across numerous attorneys who are inadvertently acting unlawfully by making gifts of the donor’s money after the donor has lost mental capacity. One lead to an increased tax bill of over £200,000, and it was too late to do anything about it.
A short meeting with us would have saved the family a small fortune.
Equally, we can highlight potential problems before they arise by discussing such things with a donor when they decide how to set up their LPA.
This sharp increase in investigations highlights the value that specialist solicitors are able to bring, primarily to a donor (who is our client) but indirectly to an attorney (who is not), by discussing all the numerous options LPAs offer, the relative pros and cons of each for that client, and to ensure that both donor and attorney understand what the attorney can and cannot do, to ensure the proper management of the donor’s affairs.
Government is encouraging people to make their own LPAs. We hear of numerous instances of people understandably making errors in the lengthy paperwork which the OPG rejects, so the donor has to start again. We can of course give all the specialist advice needed to prevent this, removing the delay and frustration caused.
But more importantly we have extensive knowledge and experience of discussing the broader aspects of managing someone’s affairs and can do much in one short meeting to prevent avoidable tax bills, formal investigations and more, with all the stress such things must bring.