Inheritance dispute solicitor, Chris Green, looks at the often controversial area of gifts made by an attorney. In what circumstances can an attorney make a gift to himself, his friends or his family, from the funds of a protected party?
A recent case,known as Re HH (2018), highlights the legal position regarding the payment of gifts by an attorney from a Protected Party’s funds, and the Court’s approach when it is asked to ratify a gift.
The case involved a dispute between HH’s two sons, TH and JH. TH was the attorney for Property & Financial affairs for HH under an Enduring Power of Attorney and for Health & Welfare affairs under a Lasting Power of Attorney.
Prompted by the Office of the Public Guardian (OPG), TH made an application for retrospective approval of various gifts made from HH’s funds to:
(i) TH himself for £99,576.89, and
(ii) TH, family members and carers for £17,218.56.
The application was opposed by his brother, JH. There seems to have been a very fraught relationship between the brothers for some time and TH had prevented JH from seeing his mother on her death bed.
The background to the situation was that HH had been diagnosed with Alzheimer’s in 2010. At the time, he lived with his wife and was cared for by her and by professional carers.
Sadly, in May 2013, his wife passed away. TH remained in England to care for his father. However, in September 2013, TH returned to Ireland. He organised his father’s care from Ireland, making numerous trips to England of a week or two to assist personally and to give his carer some respite.
It would seem, by his own admission, that TH wasn’t great with the management of money and took a somewhat laissez faire approach to the role of attorney. He felt a sense of entitlement, based on his parents’ wish not to see him go without and to ensure he was financially looked after. He regularly used his father’s bank accounts for his own personal benefit. He also arranged to pay himself a carer’s wage.
There appeared to be no dispute that TH did provide a very good level of care to HH whilst he was living at home and, indeed, the OPG’s own guidance suggests that it is often best for a Protected Party to receive a combination of professional care and care from a family member. It was also accepted that the provision of care for his father had placed a great deal of stress and a significant burden on TH, taking him away from his family and consuming most of his time and attention.
However, the legal position is that, while an attorney can make gifts out of a Protected Party’s funds, they:
- must only act in the Protected Party’s best interests;
- can only act so as to benefit persons other than the Protected Party insofar as the Protected Party may be expected to provide for that person’s needs
- can only make gifts of a seasonal nature or on an anniversary (i.e. a birthday, wedding or civil partnership anniversary) to persons who are related to or connected to the Protected Party; and
- must ensure that any gifts are not unreasonable, taking into account all the circumstances, including the size of the Protected Party’s funds.
The "best interests" test is an objective test and there is a checklist of factors set out in the Mental Capacity Act which must be considered when acting for a Protected Party. Furthermore, the OPG have issued guidance on payments to family members in relation to care provided to a Protected Party.
Where a gift by an attorney to himself or a person connected with them is made from the Protected Party’s funds, the attorney should apply to Court for approval. The Court has the power to ratify or disallow any gift by an attorney.
In this case, the Court appears to have taken a sensible and pragmatic approach, analysing the figures presented by the parties to the proceedings, hearing witness evidence from both TH and JH, and considering the checklist of factors mentioned above.
The result was that the Court ratified gifts totaling £72,820.29 but disallowed gifts of £15,546.48. It ordered that when HH passes away, the disallowed sum is to be deducted from TH’s equal share of the residuary estate, meaning that it is effectively repaid, albeit not immediately.
Ending on a happier note, whilst the legal costs of all parties involved in the proceedings were to be paid from HH’s funds, the brothers seemed to have made amends (at least partially) and JH had been allowed to visit his father in the care home where he now resided.
We specialise in disputed power of attorney cases, so if you are engaged in a dispute involving a gift by an attorney from the funds of a protected party, or if your conduct as attorney is being challenged, then please contact our specialist team of lawyers on 0808 139 1599 or send an email to email@example.com