The recent case of Re VH v. DH which was decided by the Court of Protection highlights:
- The need for those appointing attorneys to exercise caution when deciding who they should appoint; and
- That attorneys should act only in the best interests of the person appointing them.
In this unfortunate case, VH appointed her son DH to be her attorney under the terms of a Lasting Power of Attorney (LPA) which was then registered with the Court of Protection. VH had another child, a daughter and some grandchildren.
VH’s estate was modest. She owned a property thought to be worth around £180,000 and less than £1,000 in her various bank accounts. However she did receive pensions which amounted to just over £20,000 a year.
DH, the attorney, lived with a partner for some 20 years and they owned two properties. They occupied one.
In 2011, DH decided that his mother who was becoming frail and forgetful should move in and live with him. They would take out a loan secured on VH’s bungalow to renovate it and then let it out to generate an income and a loan of £72,000 was secured on VH’s property. However, VH in fact never went to live with her son because his relationship with his partner broke down.
DH claimed that he spent the entire loan renovating a property that belonged to his partner’s mother not VH who had effectively provided the funds.
One of the grandchildren expressed concerns to the Office of the Public Guardian about the attorney’s actions following which an investigation took place.
In the course of the investigation and proceedings DH was inconsistent in his version of what had occurred. The judge said that he did not find DH to be a credible witness for various reasons including the fact that:
- Initially he claimed that the payment to him was a loan;
- Later he claimed that whilst his mother regarded it as a gift, that he regarded it as a loan that he would repay; and
- He subsequently claimed that it was a gift but he had taken no steps to have the gift approved by the Court of Protection.
In general terms an attorney has a duty to act only in the best interests of the person who appoints them and should not benefit from their position as an attorney. An attorney does not have a power to make gifts.
It was established that VH did not have the capacity to make gifts herself and the court explained that in circumstances where someone was making a gift of what represented the bulk or a substantial proportion of their estate that the test for their capacity was the same as that which applies when a person makes a Will.
Where an attorney seeks to make a gift on behalf of the donor of the LPA then this should only be done with the approval of the Court of Protection.
In the circumstances, the court revoked the LPA in favour of DH and cancelled its registration.
The case highlights the need for attorneys to take proper advice before exercising their powers and not to make gifts without the prior authorisation of the court.
In the case it was reported that VH trusted her son but it was clear that she did not understand the transactions that had taken place. The case highlights the need for those considering the appointment of attorneys to take care to ensure that the attorneys are appropriate for the role and responsibilities that they are being given. In this case, DH was thought to have financial difficulties of his own.
The Private Client Team of Stephens Scown in Exeter, St Austell and Truro is able to advise both on the preparation of Lasting Powers of Attorney and on their operation by attorneys.
Ian Newcombe is a partner and head of the private client team at Stephens Scown LLP in Exeter, which was named Private Client and Family Law Team of the year at the British Legal Awards 2013. To contact Ian for further advice, please call 01392 210700 or email solicitors@stephens-scown.co.uk