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Many have recently empathised with TV’s Kate Garraway as she publicly recounted the struggles of her husband Derek Draper in his battle against COVID-19. As if his health challenges weren’t enough, she has spoken out about the additional difficulty of getting access to joint funds whilst he was in the hospital.
With most of our valued information, records and assets online, keeping them in the hands of those we trust has never been more important. With the average person holding 70-80 passwords, this raises an important question for us all - how do we manage our digital legacy, especially in the event of ill health?
Safeguarding our digital legacy
In the midst of a global pandemic, it’s important to be prepared should you suddenly be struck down with ill health. Safeguarding our digital legacy can be done in four simple steps:
- taking inventory of your digital assets and devices;
- securing your passwords;
- making decisions about your digital assets.
- providing instructions for handling your digital assets
Our digital assets become the legacy we own, and protecting them is a vital task. Should the worst happen, it’s important that loved ones have access to be able to complete transactions or stop payments on your behalf. More crucially, it can help mitigate some of the stress that a loved one may feel if struggling emotionally with your ill health. Protecting your digital legacy can mean also protecting your loved ones from significant administrative challenges.
Take stock of your digital assets
We all have a huge amount of digital assets that are expanding on a yearly basis. This could be our Netflix or Amazon accounts, bank accounts, social media profiles, and cryptocurrency accounts such as Bitcoin. Our entire lives are going virtual - so it’s becoming increasingly important that we safeguard our digital legacy.
This starts with taking stock of our digital inventory - making a note of exactly what we have online.
So how can we do that? It starts with conducting a review of our digital assets. We should examine not only the sentimental value but also the potential monetary value that our digital assets now hold. For example, Crypto and PayPal accounts are likely to hold real monetary value and similarly, intellectual property held electronically within books, videos and poetry could provide beneficiaries with significant financial gains.
On the other hand, family photos held within a Dropbox account or social media pages are much more likely to hold sentimental significance.
Since the pandemic, more of our banking assets have shifted further online. ATMs are reducing in number, and many physical branches have closed. Reduced access to physical banks means that they need to protect our digital assets is even more pertinent in a world where we conduct a lot of our transactions virtually. In the case of Kate Garraway, having joint accounts meant that one party could not access funds without authorisation of the partner. Had a schedule been kept of what passwords were held and for what, it could have protected her from what was inevitably a very stressful situation.
What happens if a loved one passes away without safeguarding digital assets? At present there are a number of legal ‘grey areas’ surrounding digital asset legacy planning and only recently has this become more common to include in a will. There is a real need for clearer guidance and an update in the law surrounding digital assets will be required in the near future. However, until that time, those writing and distributing a will should take caution.
Provide instructions for handling your digital assets
However, no matter whether it is sentimental or financial gains that digital assets could provide, ensuring that clear instruction is provided can help to ensure that they are catered for accordingly. It is wise to securely store a digital assets log that provides the access details of all accounts, or use a third-party password genie like Lastpass, along with a clear indication of what action is to be taken with each asset. However, individuals should exercise caution in doing so to ensure that they are not breaching the terms and conditions of the service provider.
If in the event of a bereavement, executors have a duty to maximise and administer an individual’s estate, but accessing online accounts without formal written permission in the will could mean that they are in breach of the Computer Misuse Act 1990.
Being an executor isn’t just about realising the assets of a will, executors often have a moral duty to fulfil the wishes of the deceased to the best of their ability and knowledge. If an executor doesn’t have the correct skillset to manage digital assets, it can cause huge amounts of stress and in turn, if proper instruction isn’t given to the executor, digital assets can be lost completely. Therefore, it is important to nominate a ‘tech savvy’ executor to manage the distribution of the digital asset element of a will - failing to fulfil the task competently could open executors up to personal liability claims from beneficiaries. It is also not uncommon to have more than one executor, who could be chosen for specific tasks based on their proficiency.
Unfortunately, before more formal guidance is available, we are likely to see an increase in problems caused by unclear or incomplete instructions regarding the legacy of digital assets.
Garraway’s struggles are a lesson to us all, and her challenges can help us all to realise that taking a safeguarding approach to digital assets is a necessary activity for every individual, young or old. Following the four steps means that we can take active measures to protect our digital legacy, for now, and the future. This process isn’t a one-time event - it’s now an ongoing endeavour that we all must undertake.
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We can advise and support you with creating your lasting powers of attorney. Learn more about the process by getting in touch with our private client team, and we’ll arrange a free call back at a time to suit you.
Our private client team is ranked as a Top Tier Firm in the Legal 500 2021 edition.
Our updated guide to recovery and resilience covers everything you need to navigate your way out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.
From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.
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Broadcaster Kate Garraway is just one of many experiencing the devastating effects of COVID-19, with her husband Derek continuing to face a year-long battle in hospital. In addition, this has been complicated further for Kate by the lack of legal protection in place.
In her recent documentary, Kate opened up about the financial struggles she was facing as a result of the absence of a Lasting Power of Attorney (LPA). As Derek was named on many of the household bills and insurance policies, Kate has been unable to manage her husband’s care or refinance her mortgage.
Unfortunately, this is not an uncommon situation. While many people think to put a will in place, which takes legal effect after the will-maker dies, LPAs can sometimes be forgotten.
What is a Lasting Power of Attorney?
An LPA is a powerful document that is prepared in advance and is invoked when an individual loses mental capacity as a result of an accident or an illness. Having one prepared safeguards personal wishes and, most importantly, allows a trusted family member or friend to make important decisions on the donor’s behalf.
Secondly, an LPA for financial affairs can also be used if a donor requires temporary assistance with financial or property affairs in their absence, such as a spell in hospital or a stay abroad.
As an LPA is a sensitive and complex document that lasts for the entire lifetime of the donor, it is best to seek the help of a professional when writing one, and ensure that this is kept under regular review.
What is the role of a Lasting Power of Attorney?
Anyone who agrees to act as an attorney for an individual needs to fully understand the role and what their role and duties will be. Our handy blog sets out guidance for attorneys acting under a lasting power of attorney.
When should I arrange Lasting Powers of Attorney?
Regardless of health, everyone should consider LPAs. These can be written for anyone from the age of 18 and typically take eight to 10 weeks to process. Accidents and illness can affect people of all ages and backgrounds, so it is advisable not to leave this exercise until you begin to feel unwell or mental capacity starts to become an issue.
What are the types of Lasting Power of Attorney?
There are two types of LPA; one for property and financial affairs, and another for health and welfare. If required, different attorneys can be appointed for each and in the event something happens to an attorney, a replacement can be appointed.
Although these are separate documents, it is highly recommended that the two are prepared and registered at the same time to ensure that any necessary decisions can be taken by the donor’s family, and to ensure that all assets are accessible.
Read more frequently asked questions on powers of attorney.
The consequences of not having a Lasting Power of Attorney
In the event the donor loses mental capacity, and does not have an LPA in place, loved ones will be required to apply for the right to manage their financial and health affairs through the court. Consequently, taking this matter to court can often be a lengthy and costly process.
Therefore, setting up an LPA whilst capacity is present can prevent loved ones from additional stress during a difficult time.
How we can help you
A devastating accident or illness can happen to anyone. Having an LPA in place can provide peace of mind that in the event that mental capacity is lost, your personal wishes will be carried out and fulfilled by those you trust.
We can advise and support you with creating your lasting powers of attorney. Learn more about the process by getting in touch with our private client team, and we’ll arrange a free call back at a time to suit you.
Our private client team is ranked as a Top Tier Firm in the Legal 500 2021 edition.
Our updated guide to recovery and resilience covers everything you need to navigate your way out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.
From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.
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Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333
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ITV Central News recently ran a feature on the increase in the number of people writing wills over the last six months – a 550% increase overall and a huge 1200% increase in those under 35.
It’s clear that people are concerned about the risks posed to them by the coronavirus outbreak and want to get their affairs in order and have one less thing to worry about.
Why should I make a will?
Making a will is important and, now more than ever, ensuring your affairs are in order and your will is up to date is on a lot of our clients’ minds. Being stuck in lockdown shouldn’t stop you from putting them in place.
Read more about how preparing a will can ensure your assets pass into the right hands.
How can I make a will during lockdown?
Ordinarily, we would meet with our clients face–to-face, but we appreciate that this isn’t always sensible, particularly if you are vulnerable.
We are happy to meet with you virtually via video conferencing facilities such as Skype, Zoom, Microsoft Teams of FaceTime if you would prefer. From that point on, we can deal with matters by telephone, email or post - we just need to ensure we are speaking with you and not someone pretending to be you!
Once we have fully understood your needs and concerns we will prepare a draft will for your consideration and send this by secure, password protected email or by post, whichever method is best for you. Your draft will is accompanied by a detailed explanatory note of each of the clauses it contains and any additional information needed from you will be clearly highlighted.
Once you receive the draft will we are on hand to answer any questions you may have to ensure you receive the high-quality service and tailored legal advice you would ordinarily receive from us.
How do I sign my will?
Ordinarily, a will must still be signed in the physical presence of two independent witnesses, despite the issues regarding self-isolating. However, the government has very recently announced a relaxation of these rules which will also work retrospectively. The changes mean that a will can be witnessed via video conference facilities.
The new legislation will apply to wills that have been made since 31 January 2020 and will apply for wills made up to 31 January 2022. Read more about the guidance for making wills by video call on the gov.uk website.
Despite this, it is incredibly important that the will is signed correctly. We will provide you with detailed instructions on how to do this and offer suggestions as to how this can be done whilst complying with the current government rules and restrictions.
For your added reassurance, we can oversee the will signing process either by video-conferencing or in person, if necessary.
Can I ask one of my family members to witness signing a will instead?
Individuals should not be tempted to ask their family or anyone who stands to benefit under the will (or anyone married to someone who stands to benefit) to be a witness. Doing this may inadvertently invalidate any gift to that person you’ve included in your will. Depending on the extent of their entitlement, this may undermine the entire purpose of preparing the will in the first place.
Can someone else manage my affairs if I’m self-isolating?
If you already have a lasting power of attorney in place then your attorney(s) may be able to manage your affairs if you need some help, depending on how they are drafted and whether they are registered.
If you don’t have one in place already then we can help keep things moving by preparing a temporary power of attorney, which is different to a lasting power of attorney in that it is very specific and you can limit it to the particular task that you’d like somebody to do for you. These can also be put in place quite quickly.
We encourage our clients to consider preparing these at the same time they turn their mind to preparing a will.
Contact us
No matter where you are on your journey, we can help to support and guide you through the process. If you’d like to discuss putting a will in place, or would like advice or guidance around the process, please contact Matt Parr on 07979 412 698, or fill out our enquiry form, and a member of our private client team will get in touch with you shortly.
From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.
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What is a lasting power of attorney?
A lasting power of attorney is a legal document that lets an individual (known as the ‘donor’) appoint one or more people (known as ‘attorneys’) to help them make decisions, or for them to make decisions on their behalf.
If you have agreed to act as an attorney for an individual, it is important that you understand the role and what your duties will be.
Types of lasting power of attorney
The types of decisions you can make will depend on whether you’re an attorney for:
- property and financial affairs;
- health and welfare; or
- both.
You may have been appointed either alone, jointly (where all attorneys need to sign/make a decision each time together), or jointly and severally (where all or any one attorney can sign/make a decision) with another, or others).
When can a lasting power of attorney be used?
Property and financial affairs lasting power of attorney
Once the lasting power of attorney has been registered with the Office of the Public Guardian, and provided that it is unrestricted, you will be able to act for the donor for the rest of his or her life, as long as the power is not revoked.
You will be able to act for the donor because he or she asks you to, or because he or she has lost the mental capacity to deal with his or her property and financial affairs, in whole or in part.
Health and welfare lasting power of attorney
You will only able to act for the donor if the lasting power of attorney has been registered with the Office of the Public Guardian and only if the donor does not have sufficient mental capacity to make the relevant health or welfare decision himself/herself.
In both cases, under the Mental Capacity Act 2005, whether or not the donor has, or has not got, sufficient mental capacity to make the relevant decision at the relevant time is issue and decision-specific.
If the lasting power of attorney has not been registered with the Office of the Public Guardian, you will have no legal powers. The donor can register the lasting power of attorney while he or she is mentally capable, or you can apply to register the lasting power of attorney.
There is no power for you to make any decision for the donor under the lasting power of attorney during the registration process. However, if the donor has capacity and needs some urgent assistance with his or her finances, a general power of attorney can be set up to cover this interim period. Read more about how temporary powers of attorney can keep things moving.
Things you can and can’t do with power of attorney
What you can do as an attorney
Property and financial affairs lasting power of attorney
When acting under a property and financial lasting power of attorney you will be able to do most things the donor could have done in relation to his or her finances and property, provided there are no restrictions in the document. Some examples of what this might include are:
- Buying or selling property
- Opening, closing or operating any bank, building society, or other, account
- Giving access to the donor’s financial information
- Claiming, receiving and using (on the Donor’s behalf) all state benefits, pensions, allowances and rebates (unless someone called an ‘appointee’ has already been appointed to do this and their appointment has previously been notified to the Department for Work and Pensions, and everyone is happy for this to continue)
- Receiving any income, inheritance or other entitlement on behalf of the donor
- Dealing with the donor’s tax affairs
- Paying the donor’s mortgage, rent and household expenses and other bills
- Insuring, maintaining and repairing the donor’s property
- Investing the donor’s savings and, as necessary appointing, or liaising with an investment manager in regard to the donor’s investments
- Making limited gifts on the donor’s behalf
- Paying for private medical care and residential care or nursing home fees
- Applying for any entitlement to funding for NHS care, social care or adaptations.
- Using the donor’s money to buy a vehicle or any equipment or other help they need
- Repaying interest and capital on any loan taken out by the donor
However, in all cases, these decisions can only be made if acting in the best interests of the donor.
Health and welfare lasting power of attorney
When acting under a health and welfare lasting power of attorney, unless the document restricts you, you will be able to make decisions about the donor’s personal welfare, health and care, which could include:
- Where the donor should live, and who they should live with;
- The donor’s day-to-day care, including diet and dress;
- Whom the donor may have contact with;
- Consenting to, or refusing, medical examination and/or treatment on the donor’s behalf;
- Arrangements required to be made for the donor to be given medical, dental and/or optical treatment;
- Assessments for, and provision of, community care services;
- Whether the donor should take part in social activities, leisure activities, education or training;
- The donor’s personal correspondence and papers;
- Rights of access to personal information about the donor; and/or
- Complaints about the donor’s care or treatment.
What you can’t do as an attorney
Whether you’re an attorney acting under a Property and financial affairs lasting power of attorney or a health and welfare lasting power of attorney, you cannot:
- change the donor’s will; or
- gift their assets away.
Your legal responsibilities and duties as an attorney
In your role as an attorney, you have important duties and responsibilities. These are set out in the Mental Capacity Act 2005 and are explained in the Mental Capacity Act Code of Practice,
However, the following provisions are particularly important:
1. You must follow the principles set out in section one of the Act:
Principle 1 - It should be assumed that everyone has capacity to make his or her own decisions, unless it is proved otherwise.
Principle 2 - A person should be provided with all the help and support possible to make and communicate their own decision, before anyone concludes that they lack capacity to make their own decision.
Principle 3 - A person should not be treated as lacking capacity just because they make an unwise decision.
Principle 4 - Actions or decisions carried out on behalf of someone who lacks capacity must be in that person’s best interests.
Principle 5 - Actions or decisions carried out on behalf of someone who lacks capacity should limit their own rights and freedom of action as little as possible.
2. You must always act in the donor’s best interests
There is guidance in chapter five of the Code of Practice to help you. However, in general terms you need to consider the donor’s past and present wishes and feelings, beliefs and values and, where practical and appropriate, consult with:
(a) anyone caring for the donor;
(b) close relatives and anyone else with an interest in their welfare; and/or
(c) other attorneys appointed by the donor.
Always check whether the donor has sufficient mental capacity to make a particular decision themselves. Remember, you can act under the property and financial lasting power of attorney if the donor does have mental capacity, if they have asked you to act in such circumstances, and there are no restrictions in the document. However, you can only act under a health and welfare lasting power of attorney if the donor does not have sufficient mental capacity to make that particular health and welfare decision.
3. Only make those decisions the lasting power of attorney gives you authority to make
For example, if you are only acting under a property and financial affairs lasting power of attorney, you cannot make decisions about the donor’s personal care, such as medical treatment. If the lasting power of attorney is restricted in any way, your authority is limited. If you need further powers in the future, you will be able to apply to the court.
Likewise, if you are only appointed as a health and welfare attorney, you have no power to make decisions about the donor’s financial investments.
4. Other duties under a lasting power of attorney
- Apply certain standards of care and skills (duty of care) when making decisions;
- Carry out the donor’s instructions;
- Do not take advantage of your position and do not benefit yourself, but benefit only the donor (fiduciary duty);
- Do not delegate decisions, unless authorised to do so;
- Act in good faith;
- Respect confidentiality;
- Comply with the directions of the Court of Protection;
- Do not give up the role without telling the donor and the Court;
- Keep accounts if you are a financial attorney;
- Keep the donor’s money and property separate from your own if you are a financial attorney
- In relation to end-of-life decisions, where authorised under a health and welfare attorney, do not be motivated by the desire to bring about the donor’s death (you may wish to save the donor suffering and to comply with his or her wishes); and/or
- Notify the Office of the Public Guardian, if the donor dies, or recovers.
How do I decide if the donor has sufficient mental capacity?
The Mental Capacity Act sets out a two-stage test of capacity:
- Does the person have an impairment of, or a disturbance in, the functioning of, their mind or brain? Examples may include conditions associated with some form of dementia, or the long–term effects of brain damage.
- Does the impairment or disturbance mean that the person is unable to make a specific decision? This stage can only be reached if you have taken all practical steps to support the donor in making the relevant decision and this has failed.
A person is considered to be unable to make a decision if they cannot, on the balance of probabilities:
- understand information about the decision to be made (the Act calls this ‘relevant information’);
- retain that information in their mind;
- weigh that information as part of the decision-making process; and
- communicate their decision, by talking, using sign language or by any other means.
The Mental Capacity Code of Practice offers useful and practical examples in chapter four of the code of practice.
Essentially you need to give the donor as much opportunity to make his or her own decisions as possible before you decide to act, and ensure you have followed the suggested steps for establishing ‘that the donor lacks capacity to make a particular decision’.
Can an attorney make gifts?
You have very limited powers to make gifts from the donor’s property when acting as financial attorney. You can only make gifts to people who are related to, or connected with, the donor (including attorneys) on specific occasions such as:
- births or birthdays;
- weddings or wedding anniversaries;
- civil partnership ceremonies or anniversaries; or
- any other occasions when family, friends or associates usually give presents.
You can continue gifts to charities if the donor was already making regular payments, or even made payments from time to time. You must remember that gifts must be reasonable in relation to the donor’s own assets and to act in the donor’s best interests.
Recent cases on this topic have provided further guidance on making gifts. Therefore, we advise that you seek professional advice before making any gift to ensure you are complying with the law in this area.
Can I make a will or codicil on behalf of the donor when acting under a property and financial lasting power of attorney?
Unless you apply to the Court of Protection for an order in this regard (and that application is successful), then you’re unable to make a will or codicil on behalf of the donor.
Getting help with understanding the role of an attorney
Putting in place a power of attorney can give a donor peace of mind that their affairs remain in good order, their assets are protected and their wishes are carried out.
Whether you’ve agreed to act as an attorney for someone else, or you’re considering putting powers of attorney in place, our team of private client lawyers will guide you through the process and ensure you understand the level of authority an attorney will have.
How can we help?
Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333
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If you need to sign paperwork now and in the future, you may not be able to get to the meeting but by planning ahead, arrangements can be made which should not delay your transactions or prevent it from happening entirely. You can do this by appointing a temporary power of attorney.
How can a delegated power of attorney help me?
It is possible to delegate your legal authority to carry out tasks on your behalf to someone else using a deed – an Ordinary Power of Attorney. The type of authority you can delegate may include the authority to sign contracts or other deeds on your behalf. You become the “donor” and your trusted third party, your “attorney.”
It is possible to implement a wide ranging and general Ordinary Power of Attorney enabling someone to manage your property and financial affairs entirely on your behalf, or to carrying out one particular task or transaction for you. The first more general type is useful in circumstances when you are out of the country or perhaps in self-isolation for extended periods. The second, more specific type, is most common and more suitable if, in all other regards, you can continue to manage your own affairs but simply require the ability to delegate your authority to complete a specific task or transaction.
Whichever type of Ordinary Power of Attorney you decide upon is right for you, you can specify a time limit, at the end of which the authority of the attorney ceases. This cessation could occur even if the transaction they were completing on your behalf is still not complete in which case new authority would be needed by way of a newly executed document.
What can a power of attorney complete on my behalf?
Some examples of when it may be appropriate to execute an Ordinary Power of Attorney to enable someone to act on your behalf include:-
- Executing deeds – for example, to enable the attorney to sign a transfer deed on the sale or completion of a property on your behalf;
- Completion meetings – for example, to enable the attorney who will be in attendance to sign the transaction documents on your behalf;
- On selling shares – for example, you may have completed on the sale of shares to a third party but prior the buyer being listed on the share register, you may execute an Ordinary Power of Attorney in favour of the buyer in order that they can carry out any transactions they wish with their new shares while they remain in your name on the register;
- Proxies – for example, you cannot attend a shareholder’s meeting and as such to enable an attorney to vote at that meeting on your behalf.
Provided the Ordinary Power of Attorney deed is drafted appropriately, you can choose to revoke the power you have delegated at any point which can be a useful failsafe if your attorney acts in any way contrary to your best interests.
Ordinary Powers of Attorney can be prepared swiftly and they are often required at short notice. It is important, however, particularly if granting a specific power, that the drafting of the deed itself is wide enough to ensure the attorney can do what is required to complete the transaction but not too wide so as to allow the attorney to make decisions outside the scope of the authority you wanted to delegate in the first place.
How do Ordinary Powers of Attorney differ from Lasting Powers of Attorney?
The use of Ordinary Powers of Attorney does tend to be better suited to transactional or commercial contexts and there is an important distinction to be made between them and perhaps the more common Enduring and Lasting Powers of Attorney. The latter two types of power enable your attorney to continue acting on your behalf even if you lost your mental capacity. An attorney acting under an Ordinary Power of Attorney cannot continue acting in those circumstances – their authority ceases with you having lost mental capacity.
If you are concerned about the ongoing management of your affairs in the longer term, in particular in the event you lose mental capacity, you should consider preparing Lasting Powers of Attorney.
If you would like to discuss any of the issues raised here about appointing an ordinary Power of Attorney or any aspect of managing your affairs, please do contact Matt Parr or another member of the private client team in your local office.
For advice or guidance on any other legal issue, a member of our team can help – please click here to discuss.
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How can I protect my assets?
Wills clearly have an important role in estate planning on death, but often the best inheritance tax planning opportunities are those effected during one’s lifetime.
Whilst stock markets are tumbling, property prices falling and businesses of all sizes are facing uncertain futures, it’s reasonable for people to sit tight and be hesitant to part with their wealth. However, ironically, some of the best tax saving opportunities can be found and achieved in a falling market.
So how can I reduce my tax liabilities?
Capital gains tax (CGT) often prohibits the direct gifting of assets to individuals. However, if the value of an asset decreases in a falling market, then so does the impact of capital gains tax on the gift – this is because the tax is based on the gain that’s been made on that asset, and not on the value received. This is often overlooked by individuals, who only recognise the potential implications for inheritance tax and not those for capital gains tax.
Gifting assets into a certain trust can potentially mitigate an immediate charge to CGT on the person making the gift, deferring it into the hands of the trustees of the trust, often giving them time to plan/minimise the future crystallisation of such a gain.
A decrease in the value of assets could also mean that more assets can be placed into a trust before any inheritance tax is triggered – so a double tax-saving opportunity.
We understand it’s a difficult time
We know that looking after the wealth you have accumulated during your life really matters, so we want to help you and your family to make the most of it. Whilst it’s currently a time of uncertainty for many, there are plenty of opportunities out there for effective wealth planning that will make a real difference,
Contact a member of your local private client team to help guide you through the process.
For advice or guidance on any other legal issue, a member of our team can help – please click here to discuss.
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An attorney is an individual person who has been chosen by another to manage that person’s financial affairs in the event that they lose mental capacity to make decisions themselves. An attorney is appointed using either a Lasting Power of Attorney (LPA) (or an older Enduring Power of Attorney). Someone who is appointed by the Court of Protection to act on another person’s behalf should they lose mental capacity and have not appointed an attorney themselves, is called a deputy.
An attorney (or deputy) acts on someone’s behalf while that person is still alive but lacks mental capacity to manage their own affairs, whereas an executor is appointed in someone’s will and acts on their behalf after they have died. An attorney’s power to act on someone’s behalf ends on that mentally incapable person’s death.
What can an attorney do?
The Lasting Power of Attorney document will set out what decisions an attorney can make. Many choose not to place restrictions on what an attorney can do, instead, trusting them to make whatever decision may be necessary to safeguard their best interests. A deputy’s powers are governed by the court order appointing him or her in the first place.
If an attorney or deputy wish to make decisions outside of their remit – they must first obtain a court order authorising their course of action.
Whatever powers an attorney or deputy may have, they must both act in accordance with the Mental Capacity Act 2005 (MCA) and the accompanying Code of Practice.
Making gifts
A common question that private client practitioners are asked is whether an attorney or deputy can make gifts on the donor’s behalf out of the donor’s own funds. The gift might be a small cash gift in recognition of a grandchild’s birthday or a larger gift intended to, for example, mitigate an anticipated inheritance tax liability.
The first thing for an attorney to consider is what is in the best interests of the incapable person.
Previous cases indicate that the court is very likely to authorise the gift if a number of factors are satisfied, such as, the amount of the gift is it within the inheritance tax annual exemption of £3,000 or it falls within the inheritance tax small gifts exemption (currently £250) and the estate is likely to suffer inheritance tax in the first place (because it exceeds the current £325,000 nil rate band), the life expectancy of the incapable person is less than five years and the gifts are affordable. Above all, however, the court will consider whether it is in the incapable person’s best interests to make the gift and evidence that the incapable person would have opposed the gift will be a very relevant factor in their decision making.
An attorney must make an application to court for an order approving the making of any other gift. The Attorney must present the court with a lot of information about the incapable person’s affairs in order that the court can make a decision accordingly.
But I want to make smaller gifts
The MCA allows attorneys to make gifts to persons related or connected to the incapable person on occasions when gifts are “customarily” made and under an older EPA documents gifts can be made on “seasonal occasions” i.e. birthdays and Christmas – The court’s authorisation isn’t needed in those circumstances provided that the LPA/EPA document doesn’t expressly forbid it.
Not wishing to deter charitable gifting, the MCA does allow gifts to a charity that the incapable person has previously made gifts to – again unless expressly forbidden.
It is also important to consider the provisions that the incapable person may have made in their existing will. The LPA or court order may include provisions for you to take possession of the incapable person’s original Will, otherwise, you should request a copy of it. You should consider whether any proposed lifetime gifts would interfere with any gifts made in their will – if so, this may be evidence of the fact that the incapable person would object to the gift being made if they could.
Above all, any gift made must not be unreasonable particularly when taking into account the size of the incapable person’s estate and making the gift must be in the incapable person’s best interests. Whether an attorney should make a gift in any particular scenario will be determined on a case by case basis.
Any attorney or deputy thinking about making a gift, large or small, should consult a professional and take all steps necessary to ensure they have considered all the relevant factors before making a decision. An attorney or deputy’s duty is to safeguard the incapable person’s best interests first and foremost.
For further information or advice on this or any other private client matter, contact Matt Parr on 01908 304 420 or matt.parr@shma.co.uk. A member of our team can walk you through everything. Click here to discuss.
It is a good choice to have a power of attorney, which allows nominated individuals to take over management when capacity is lost, due to old age, illness, or injury.
Under normal circumstances, managing bank accounts is the main responsibility of an attorney. However, in the agricultural community, it is possible that attorneys will be required to run a large farm, and deal with the complexities that come with it.
Debra Burton, contentious will and probate specialist, explains:
Due to the substantial responsibility of managing a farm, nominating the right person to have power of attorney on your behalf is vital and not an easy decision to make. Not only is the present success of your land important, but so is it’s future success. Whoever is granted power of attorney on your behalf should share your values in order to secure the farm’s continued upkeep, as well as having the knowledge, skills and desire to manage the farming business if necessary.
Unfortunately, willingness alone is not enough to maintain and manage a farm. When choosing an attorney – or attorneys – considering organisational ability, financial awareness, and trustworthiness is key. If you are appointing more than one attorney, a good relationship between the attorneys is essential to avoid conflict. It is not uncommon for those who have power of attorney to butt heads over what each thinks is the right decision for the person and the farm. Although two heads are often better than one, it could lead to disputes e.g. about whether to sell the land or not.
When an attorney’s role involves managing a farm, tackling it alone can be difficult. Therefore, appointing two or more attorneys is the safest choice. Doing so shares responsibility while also lessening the chance of someone abusing their power over your assets.
Liaising with a solicitor is the ideal place to start the attorney appointment process. Your solicitor will discuss your possible choices and your wishes and can also assess whether the candidates have the capacity and ability to fulfil the role. Not only this, your solicitor can also notify the future attorney/s when necessary. Once the appropriate documentation has been drafted and signed, it can be kept safe until needed.
Even after the most careful thought, there is always the possibility that future issues can occur, such as fraud, theft, or an attorney acting out of line with your wishes. The Office of the Public Guardian (OPG) monitors attorneys and anyone who believes an attorney is not behaving in an appropriate manner should notify them. If the behaviour is criminal, then the police will need to be notified.
Executing a power of attorney is a decision that carries consequences. You need to know that if you were to lose capacity, the person or people taking over will run your farm as you’d like it to be run.
Additionally, agreeing to be someone’s attorney is also not a decision to be taken lightly. Successfully managing a farm involves a level of dedication and knowledge that goes beyond most businesses. Choosing wisely is necessary for the future legacy of your farm.