It is common for people who are married, or cohabiting, to name their partner as their attorney under a Lasting Power of Attorney (LPA) for Property and Financial Affairs. Of course, this makes sense as they are the person who is likely to know the most about your personal and financial circumstances.
There is however a danger if someone is appointed as your sole attorney, but they are also your co-owner. A professional will normally highlight this risk, but with many LPAs now being prepared by individuals without professional assistance, this can often go unnoticed. Problems can arise if you lose capacity, usually when the LPA is most needed. In this scenario your co-owner could not sign paperwork both on their own behalf and on your behalf as your attorney. This is not only because there is strong possibility of a conflict of interest but also because there are specific statutory provisions requiring the sale of jointly owned land to be undertaken by 2 separate trustees (not one person acting in 2 capacities).
This is most apparent if one partner requires care. It is common practice for Local Authorities to offer to secure the payment of care fees via a deferred payment charge. This means that the family home does not have to be sold, at least not immediately, but the Local Authority have security for care fees that they pay on your behalf.
The co-owner does not have to agree to this charge being secured against the property. It would be normal for a co-owner to take separate advice before signing any paperwork, to ensure that they understand and are happy with the implications of the charge on their interest and ability to deal with the property. The co-owner may not wish to enter into the charge. However, having secured funding for ongoing care will usually be in the best interest of the co-owner who requires care and can no longer enjoy living at home.
Similarly, the attorney may wish to take out additional borrowing and to have this secured against the property. If a person lacks capacity, but their co-owner is also their attorney, then the attorney could (if the rules permitted) borrow as much as they wanted and give security for their borrowing against the property.
In cases where there is only one attorney and they are also a co-owner, it can be necessary to apply to the Court of Protection for the Court’s authority to enter into a deferred payment charge, or to obtain an order for sale with the appointment of a replacement trustee. It is not uncommon for Local Authorities to suggest this application to the court if they become aware that this is the situation.
If you simply wish to sell the property of your incapacitated co-owner (and you are solely appointed as their attorney), it is possible to do this without a Court order under the Trustee Delegation Act 1999. However very careful consideration then needs to be given to the appropriate use of the sales proceeds, and certainly we would urge professional assistance here to ensure you do not fall foul of the provisions of the Care Act 2014.
If you find yourself in the position of having your co-owner appointed as your sole attorney, and you would like to discuss the options available to you, then please contact Ashley Minott on email@example.com or 01494 893518.