Spending money as an Attorney: the dos and don’ts

Spending money as an Attorney: the dos and don’ts

There have been a number of cases where, for whatever reason, Attorneys have not always adhered to the provisions of the Mental Capacity Act 2005 and the Code of Practice particularly where it comes to the question of gifts or other payments.

What the legislation states

A Lasting Power of Attorney is a legal document that allows someone (the ‘donor’) to give authority to a third person (the ‘attorney’ or ‘donee’) to make certain decisions on their behalf. A Lasting Power of Attorney is used when that person is unable (or sometimes simply does not wish) to make certain decisions for themselves.

Section 1(5) Mental Capacity Act 2005 (MCA 2005) states:

“An act done, or a decision made, under this Act for or on behalf of a person who lacks capacity must be done, or made, in his best interests”.

Section 12(1) MCA 2005 states:

“Where a Lasting Power of Attorney confers authority to make decisions about P’s Property & Affairs, it does not authorise a donee (or, if more than one, any of them) to dispose of the donor’s property by making gifts except to the extent permitted by sub-section (2)”.

Sub-section (2) states:

“The donee may make gifts –

(a)  On customary occasions to persons (including himself) who are related or connected with the donor, or

(b)  To any charity to whom the donor made or might have been expected to make gifts

If the value of each such gift is not unreasonable having regard to all the circumstances and, in particular, the size of the donor’s estate.”

What’s allowed?

The power to make gifts therefore is limited. If, for example, a person makes a customary gift of £100 to each grandchild on the occasion of a birthday or Christmas, then if, having regard to the value of the estate, that gift is reasonable, an Attorney may continue to make such gifts. This power to make gifts is not an invitation for the Attorney to be extravagant with donor’s money nor is it an authority for the Attorney to treat the donor’s money as if it were their own.

What not to do

Unfortunately, there are a number of examples where an Attorney has not acted in the donor’s best interests.

In one case monies were transferred from the account of MRJ to the Attorney and spent on purchases for him thus depriving MRJ of cash.  The Attorney was described as having “callously and cynically manipulated this account for his own advantage”.

In a second example there were “excessive and uncharacteristic withdrawals” from JL’s account.  The Attorney tried to justify the expenditure by saying that “there is no point in JL being the wealthiest woman in the graveyard.”  She was, however, living in very impoverished conditions.

In another case the appointment of PC’s two sons as Attorneys was revoked, with the Court describing their actions as “serious breaches of fiduciary duties.”  There was undocumented expenditure (£25,000 in cash and £65,000 in cheques), evidence that £15,000 was used to pay one Attorneys son’s University fees and almost £1,000 was spent at a restaurant which PC never visited but was close to the office of one of the Attorneys.

If it is desired to make a gift from the donor’s property which is not customary or is large in relation to the assets as a whole, then the authority of the Court must be sought under Section 23(4) Mental Capacity Act 2005.

So Attorneys, always act responsibly and in accordance with the law, and remember, it’s not your money.

Robert Tozzi

Robert Tozzi

Partner at Burley & Geach Solicitors

Robert is a Partner in Burley & Geach based at Liphook and qualified as a Solicitor in October 1989.

He has over 25 experience in his chosen fields, the last 19 years at Burley & Geach, where he started as an assistant Solicitor, becoming a Partner in the firm in January 2009.

Robert deals with Wills and Inheritance Tax planning, Administration of Estates and Trusts, creation, registration and use of Lasting Powers of Attorney, registration and use of Enduring Powers of Attorney, Court of Protection and also freehold and leasehold residential conveyancing.

He has been a member of the Society of Trust and Estate Practitioners (STEP) since January 1996 and is a fully accredited member of Solicitors for the Elderly.