A mum, dad and child hold hands as they walk along a beach

Why it might be a good idea to involve non-family members in your affairs

Family members are often the people closest to us and when choosing people to deal with our affairs, whether during lifetime or after death or incapacity, a close relative might seem like the obvious choice. But the nature of that close relationship means that emotional considerations are far more likely to affect the decisions made by family members than decisions made by people outside the family circle.

In addition, conflicts of interest are likely to arise in a number of situations especially where different generations or different branches of a family are involved. For example, John might leave his estate upon trust to pay the income to his widow, Gina, for life, with the capital passing to their two children on Gina’s death. The children and Gina are appointed as trustees. There is power to advance capital to Gina at the trustees’ discretion. Gina decides that she would like to spend some of the capital on travel, while her children are concerned about maximising the capital to pass onto their children. Immediately a conflict of interest arises and a possible dispute if the children decline to exercise their powers in Gina’s favour. If an independent person had been a trustee of John’s Will trust, he or she could make a decision based on the correct application of trust law and without any personal considerations affecting them.

An extreme example of this situation was heard  in the High Court last summer. The claimant sued his older brother for breach of trust, arguing that his brother, who dominated him emotionally and was trustee of a large trust fund of which the claimant was a beneficiary, had persuaded him to agree to the dissolution of the trust fund which ultimately had ended up under the older brother’s complete control.

Sadly, most applications to revoke Powers of Attorney heard by the Court of Protection involve children acting as attorneys for elderly parents and breaching their powers either deliberately or inadvertently, often by making unauthorised gifts. One way to avoid this situation is by making provision in the Power of Attorney that the attorney has to produce accounts for inspection on a yearly basis to an independent person. Any unauthorised use of the elderly person’s assets can then be identified and prevented at an early stage.

Appointing an independent person does not necessarily mean appointing a professional, although in some cases it might be the best way forward, but it could mean appointing say a close family friend who could ensure that a measure of neutrality is brought to bear in what might otherwise be potentially difficult situations.