A Lasting Power of Attorney (LPA) can be a useful tool when people become incapable of running their own financial affairs. An LPA allows someone, of the donor’s choice, to step in and take control of the donor’s finances.
Because of the great power the LPA gives them, attorneys are often trusted friends or family of the donor. However, where attorneys abuse this power, measures have to be taken to protect the donor. This is particularly important when the donor cannot protect themselves or even complain about the way their attorney is acting.
The warning signs
These are examples of events which might raise concerns about whether the attorney’s powers are being used properly.
Excessive gifts
Whilst attorneys are allowed to make gifts to people related to or connected with the donor, including themselves, these gifts should only be on customary occasions (for example birthdays, Christmas, etc) and should not be unreasonably large. The gifts should also not be disproportionate to the pattern of giving the donor did when they had capacity.
In Re GM, the attorneys gave family members £1000 each for Christmas. It was later revealed that although the donor had regularly given gifts while competent, these were usually no more than £20. It was held that the gifts made by the attorneys, which included gifting themselves cars, computers, expensive handbags and jewellery from the donor’s house, were invalid.
Loan applications or credit cards taken out in the donor’s name
This could raise concerns about potential misuse of the attorney’s powers, particularly if the donor does not benefit from the loans or credit cards.
In Re Harcourt, Mrs Harcourt’s daughter became an attorney after her mother lost capacity. Suspicions were raised when the care home manager became aware of letters about bank loans and credit card applications being taken out by the daughter in her mother’s name. The matter was consequently investigated and it was revealed that the daughter had abused her powers of attorney in order to make personal financial gains.
High risk investments or investment in a business the attorney owns or has an interest in
Investments must be in the donor’s best interests and in particular, must not benefit the attorney. An investment in the attorney’s own business would be a serious cause for concern.
Failure to pay the donor’s expenses or a general lack of money made available to the donor
This would raise concerns that the attorney is not properly administering the donor’s financial affairs. It is important for attorneys to actively manage the donor’s affairs as this is the purpose of the LPA.
Failure to keep the donor’s money separate
Attorneys should keep the donor’s and their own money separate. Failure to do this would raise concerns about whether the attorney is acting properly.
What can be done?
- If the donor has sufficient capacity, they can cancel the LPA by signing a Deed of Revocation and notifying the attorney;
- If the donor does not have capacity, you can contact the Office of the Public Guardian in the first instance and ask them to investigate the concerns;
- If you have sufficient evidence regarding the abuse, you could make an application to the Court of Protection for an order that the LPA is cancelled and a deputy is instead appointed to manage the vulnerable person’s finances. It is advisable to seek legal advice before court proceedings are started.
