A retired senior judge, Denzil Lush, has warned that the Power of Attorney system in England lacks adequate safeguards to protect people. Denzil Lush said people should be aware of the risks involved in making Powers of Attorneys. These can, he said, cause terrible harm to family relationships as well as financial loss if the power is abused.
What are Powers of Attorney?
A Power of Attorney grants the legal power to the appointed attorney or attorneys to manage the property and affairs of the donor of the Power, sometimes also called the appointor. The ability of attorneys appointed under ordinary Powers of Attorney ceases if the donor becomes mentally incapable – which is often when it is most needed! Enduring Powers of Attorney (EPAs) were introduced in 1985 under which the authority of attorneys to act continued even when the donor lost capacity. EPAs covered only financial decisions. Lasting Powers of Attorney (LPAs), which replaced EPAs in 2007, enable donors to appoint attorneys who can assist them in making decisions relating to both their property and financial affairs and (via a separate deed) their health and care. These enable the attorney(s) to make decisions after the donor has lost their mental capacity. There have been some appalling cases where elderly donors have lost everything to their attorney(s). As Attorneys are trustees of the donor’s money and property, they cannot benefit personally and can only use them for the donor’s benefit otherwise they will be acting in breach of trust. Depending on how badly funds are misapplied, this amount to theft which is a criminal offence and can lead to prison. However, this is little consolation if everything is lost. Of course, in the great majority of cases the Power works well and donors can rest assured their family are taking care of their affairs.
How does a Power of Attorney work?
A donor of a Power of Attorney can make a series of choices as to what property or decisions are to be covered by the power, all or just specified property, and who is to have the power to administer that property. For example, donors going on holiday may grant power to their solicitor to buy or sell a particular property so that the solicitor can sign everything on their behalf but choose not to give access to their bank account. Another example is that an elderly donor may want all their affairs managed and in this case the power could cover everything. The sensible approach is to appoint more than one attorney who are not too closely connected, so they can check on each other. If the donor has two or more children, they could be appointed jointly and severally. If they are appointed jointly and severally then one can act alone but if the other suspects something underhand, they have the legal power to check the bank accounts. If they find money has been misapplied they can take matters up with the Court of Protection, as the Court of Protection have the power to cancel an appointment if it is being abused.
Why elderly people need a Power of Attorney?
It is usually a good idea for elderly people to have more than one unconnected attorney they trust. If the elderly person were to lose mental capacity, someone who they would have never chosen could apply for a Power of Attorney on their behalf. The more unconnected attorneys who can access the donor’s accounts and check on each other, the less likely one of the attorneys is to act in breach of trust.
How can you avoid your Power of Attorney going wrong?
- Appoint more than one person.
- Appoint unconnected attorneys so they can check on each other.
- Appoint people you trust.
- Appoint attorneys who are younger than you.
- Discuss a Deputyship with your solicitor – it may cost more but could be the best option for you if there is no one you wish to appoint.
Denzil Lush refers to the damage these Powers of Attorney can do to family relationships. Yes, this can happen, commonly if one child is appointed and not another, it may seem unfair to the other. However it is not always appropriate to appoint all your children if, for example, you know your children could not work together, one is hopeless with money or one lives abroad. Whatever the reason, it may be best to assure your children that there are logistical reasons for leaving one out.
Powers of Attorney in general, and LPAs in particular, are extremely useful, particularly for the elderly, provided trustworthy appointees operate the power within the rules, not taking any personal benefit and using the power solely to meet the needs of the donor. Common sense should dictate the donor’s choice of attorney and attorneys should be monitored periodically by another unconnected attorney to ensure the power is being used correctly.