A smiling carer chats with an elderly lady

Powers of Attorney and Inheritance Tax Planning – the do’s and don’ts

In  a recent decision made by Senior Judge Lush in The Public Guardian v AC & Anor [2014] EWCOP 41 (05 November 2014) – it was held that an attorney appointed under a Lasting Power of Attorney had behaved in a way that “contravened his authority and has not been in P’s best interests”.

It is a fundamental principle of acting as an attorney (or deputy) that all actions must be in the best interests of the donor (or P). Simply being able to sign a cheque book because the power of attorney or court order says that such signatures can be made, does not confer authority to make payments without proper regard as to why these payments are made.

The other issue that arose during the case concerned inheritance tax planning. Senior Judge Lush makes it clear in his judgment that “s12 of the Mental Capacity Act 2005 confers on attorneys a limited authority to make gifts of a reasonable amount on customary occasions. If attorneys wish to make more extensive [gifts] for Inheritance Tax planning purposes, such as setting up monthly standing orders of £250 to themselves, they should apply to the Court of Protection for an order pursuant to section 23(4) of the Act”.

Judgments such as this make me worry about the lack of knowledge of attorneys and deputies.

As a solicitor specialising in this matter, I spend a lot of time reading case law, statute, attending courses and liaising with other professionals. I carefully consider the decisions made by my colleagues who are professional attorneys (for whom I act) and ensure that all decisions are carefully recorded and accounts maintained.

Accepting an appointment as attorney does not automatically mean that someone has all the necessary financial and legal skills to manage the affairs of another. With great power comes great responsibility.

For information about the duties of an attorney or putting in place a Power of Attorney please contact Anthony Fairweather.