The Attorney's Duties
We have all read, or heard about, abuse of Enduring Powers of Attorney (“EPOA”) where the Attorney, often a family member, has deliberately fleeced the Donor (the person who gave the EPOA) of vast sums of money to the near financial ruin of the Donor, and longer-term detriment of other Family members’ possible inheritance.
Fortunately, this has not been an issue for any of our clients but we have come across other situations where Attorneys have exceeded their powers. Too often an Attorney considers the EPOA gives them a carte blanche right to deal with the Donor’s property as they see fit. Attorneys have a fiduciary relationship with Donors. That means the Attorney, the person with the duty, must act only in a way that will benefit the Donor.
The Donor’s Best Interests
The role is prescribed the Protection of Personal and Property Rights Act 1988 and the formost responsibility for any EPOA Attorney is the Donor’s best interests. It is not in the Donor’s best interests, although it may be in the interest of the Donor’s ultimate beneficiaries, to distribute their funds amongst family members, even those eventually may be the beneficiaries of the Donor’s Estate. Attorneys cannot benefit themselves unless the EPOA document specifically provides for that. If it is not provided for, an Attorney is not entitled to receive any recompense other than out of pocket expenses, for which they must keep receipts.
Dealing with the Assets and Liabilities
Attorneys must account for all the Donor’s property and must keep very thorough records; it is a criminal offence not to do so. Attorneys must keep the Donor’s property separate from their own. They must avoid positions where their interests may conflict with those of the Donor. Attorneys must show financial stewardship, that is prudence rather than profligation and waste.
It is part of an Attorney’s responsibility, on activation of the EPOA, to identify the Donor’s assets and liabilities; it is recommended that Donors complete and try to keep up to date such a list and the whereabouts of all key documents and passwords. The role can be onerous, as it frequently involves dealing with major assets such as property – having to decide whether to sell or rent, store or sell chattels; investment decisions in accordance with the Trustee Act must be made, bills paid and tax returns filed.
Attorneys have a duty to consult with the Donor as far as practicable, and irrespective of the Donor’s capacity, as part of acting in the Donor’s best interests (and encouraging their competence). Attorneys should meet regularly with the Donor, and the Donor should be updated on their financial status on a regular basis.
Unfortunately, in recent times we have seen situations where Attorneys have quickly decided it is not practicable to consult with the Donor even when there has been no formal medical determination that the Donor has lost capacity. Frequently those Attorneys believe they are “doing the right thing” and looking after the Donor’s interests, but there are unfortunately many occasions where Attorneys decide that they are now the decision maker, possibly they perceive in the best interests of the Donor.
The Property Attorney is required to consult with the Care and Welfare Attorney if they are not one and the same person; it is recommended to have different Attorneys for each role as the roles have different skill sets required. The Donor’s care and welfare needs are paramount and unless financially impossible, must be met. The Attorney’s responsibility is not to preserve the Donor’s property for those who may benefit under the Donor’s Will; to be blunt, to do otherwise is theft.
If the EPOA requires it, the Attorney must consult with any other persons named. Consultation is defined as asking for advice and giving that advice proper consideration before making a decision in the Donor’s best interests. For consultation to be effective the person being asked for advice has to be given all the information they may need on which to base their advice. Similarly, with respect to providing any information to any persons nominated. Consultation is not after the event.
Transparency when dealing with a Donor’s property can alleviate suspicion and future costly argument, or application to the Family Court, or even criminal investigation, and possible charges. If, as an Attorney, you have any questions as to the management of a Donor’s property please contact us. Operating outside of one’s powers is perilous and can be personally costly.