Acting as an Attorney or Deputy to manage a relatives finances is becoming increasingly common. There are pitfalls which can cause problems. In particular when acting as attorney or deputy problems can arise in making investment choices and gifts of money, property or other assets.
Two recent cases have helped to clarify the law. In Re Buckley 2013 the Public Guardian applied to revoke a registered Lasting Power of Attorney. The attorney Miss Buckley was niece of her aunt who lived in a care home. Concerns had been raised by the attorney’s actions. On investigation it was found that she had used £72,000 of her aunt’s money to set up a reptile breeding business and in total £150,000 of her aunts money had gone missing. Miss Buckley attempted to argue that she had acted honestly in her aunt’s best interests. The court rejected this argument pointing out she had a fiduciary duty and should have acted in a manner similar to that of a trustee.
The second case is RE GM 2013. Here a niece and great niece applied for retrospective approval of gifts and payments from their aunt’s funds. The aunt’s funds were around £500,000 and it was revealed that around £300,000 had been spent on gifts by the attorneys to themselves their family and friends. The long list of purchases included a number of items of “bling” such as a Rolex watch (£18,275), Mulberry handbag (£1,080) ring (£16,500) Vivienne Westwood handbags, and an Omega watch (£17,000) and so on. They also claimed the costs of buying cars to visit the aunt and said that they were acting in line with their aunt’s generosity. In fact the aunt when she had been well showed her generosity modestly by purchasing a meal or entrance fees on a joint outing and on one occasion purchasing a fan heater for the attorneys daughter. The court took the view that the attorneys had acted as though they had “licence to loot” and refused to approve the gifts with the exception of some charitable payments.
The court gave useful guidance to attorneys in general. Attorneys should consider the size and extent of the estate and make gifts in line with the IHT annual exemptions. The court stated ignorance of the law is no excuse.
These cases show the importance of taking proper professional guidance to avoid the serious pitfalls that can arise. Acting as attorney can be onerous and it is proper and prudent to take professional advice in dealing with another’s finances.
Cliff Veitch (Cliff Veitch is a member of Solicitors for the Elderly and specialises in this area of law).