Financial “Abuse” of the Elderly and the Lasting Power of Attorney

It’s often thought useful to create a Lasting Power of Attorney, in case you lose capacity. Close family or trusted persons might otherwise be unable to access your bank accounts, sell your property etc., without the cost and delay of applying to the Court of Protection, to appoint a deputy, to manage your affairs, if you suddenly lost capacity.

But there are down sides writes Julie Bradwell, Dispute Resolution Solicitor with Ware & Kay.  “I often see siblings at war, who have lost trust in close family members, often brothers and sisters and allege the sibling, appointed Attorney, under a Lasting Power of Attorney, is taking unauthorised money from their loving parent’s bank accounts for themselves.

Equally, there are tragic cases of parents who genuinely wanted to make a generous financial donation to their adult child in their lifetime, but after their death, the favoured child is accused, by the sibling, of financial impropriety towards their mutual parent”.

People often arrange for banks to prepare their Power of Attorney, usually with little or no advice on the implications. They tend to register the Lasting Power of Attorney with the Office of the Public Guardian straight away, even though the parent who has agreed to appoint, usually their children, as Attorneys over their financial affairs, is perfectly intellectually capable of still managing their finances. There is a different type of LPA dealing with health and welfare.

So what could possibly go wrong?

In cases involving large lifetime gifts to an Attorney by a Donor (the Donor is the person on whose behalf the Attorneys are appointed) the Courts, other than in very limited circumstances, may find the Attorney, “Unduly influenced the Donor.” It is not even necessary, in most occasions, to prove undue influence, as the relationship between a person who has given power of Attorney and the person to whom it was given, carries a presumption of undue influence.

A Court does not have to find that receipt of the gift by an Attorney, often close relative, of the Donor, arose from improper behaviour.  Just by the nature of the trust put in an Attorney, if receiving generous financial gifts from Donors, Attorneys are likely to be compelled, if caught, to pay it back.

Often, gifts to Attorneys are first discovered by executors.  When reviewing the deceased’s bank account transactions, they become aware of large financial transactions having taken place from Donor to Attorney. Trying to defend the payments received by an Attorney, based on seeking to rebut the presumption of undue influence, might be possible, but may be risky and a costly gamble in Court.

The lesson for some may be to seek legal advice if you are planning or have given, as a Donor, substantial funds to an Attorney, or you are planning to be an Attorney, or are an Attorney and it is planned that you receive, during the Donor’s lifetime substantial valuable gifts, and it is not intended that the large financial gift, in future, is paid back to the estate.   Also if you are an executor and discover large financial gifts by the deceased to an appointed Attorney, you may need specialist legal advice.

For any help and advice regarding disputes on inheritance or any other litigation matter contact me Julie Bradwell on Wetherby 01937 583210, York 01904 716000 or Malton 01653 692247 or email julie.bradwell@warekay.co.uk.

This article does not constitute legal advice.