Attorneys under Lasting Powers of Attorney (LPA) have the ability to make a range of decisions on behalf of the donor (person who made the LPA). This authority continues even if the donor loses mental capacity and it allows the attorney to continue to managed their affairs on their behalf.

There are however several limitations on the authority given to attorneys. These limitations are largely due to the fact that, as an attorney, there is always supposed to be a clear distinction between your own money and money you manage on someone else’s behalf. There are therefore steps that you cannot take on someone else’s behalf without the approval of the Court of Protection. This includes:

1. Making gifts- attorneys are permitted to make small gifts on behalf of the donor. These should be on special occasions (birthdays, Christmas, weddings) to family members or close friends and should only be of a “reasonable amount” (determined by the size of the donor’s estate). This can often cause issues, particular where an attorney wishes to undertake inheritance tax planning on the donor’s behalf.  It is possible to apply to the Court of Protection to ask for larger gifts to be approved, but you should always be mindful that you will need to show that it is in the donor’s best interest to give away this money (not always an easy thing to do).

2. Taking on trustee’s duties- this can take a few forms: the most common example is where a person is appointed as an attorney but they also own land with the donor.  When people own land together, there is a type of trust in place. An attorney cannot act in their own personal capacity and as an attorney for their co-owner. In these instances, if there are no other attorneys named, then an application to the Court of Protection may be required to appoint someone else as a trustee of the land (and proceeds of sale).If a person is a trustee of an explicit trust then the attorney would also be unable to act on their behalf in this role. If the trust document allows, then the other trustees should appoint a replacement for the incapacitated trustee. If this is not possible, for instance if the incapacitated trustee is the last remaining trustee, then an application would need to be made to the Court of Protection.

3. Delegating authority to a third party- this may seem like a bit of a strange one but attorneys are not allowed to delegate their discretion. This is because the attorney is expected to actively manage and review all decisions being made in relation to the donor’s affairs. This can cause issues where the donor has investments which are managed by a discretionary fund manager. It is possible to include this authority into a Lasting Power of Attorney, but it does need to be explicitly included. If not then, you guessed it, the attorney will have to apply to the Court of Protection to extend their authority to include delegation to discretionary managers.

4. Making a Will- attorney cannot make or amend a donor’s Will. If someone lacks capacity and there is a clear need to create a Will or amend their existing Will, then it is possible to apply to the Court of Protection for a statutory Will to be put in place on their behalf. This process is complex and time consuming. The Official Solicitor will be appointed to review the proposed Will on the incapacitated persons behalf, and there is a legal requirement to notify any person who would be affected by the Will, either beneficiaries under an existing Will or family who would otherwise be entitled under the rules of intestacy. For this reason, anyone considering applying for a statutory Will should take professional advice to fully understand the risks, the process and the likely costs (which can be significant).

If you are appointed as an attorney and have any questions regarding the extent of your authority then please contact Ashley Minott on 01494 893518 or on Ashley.minott@allanjanes.com