The recent case of Re: Buckley contains importance guidance for attorneys or deputies regarding investment of a donor or patient’s funds.
This case involved a Lasting Power of Attorney (LPA) granted by Mrs Buckley – a wealthy lady – which appointed her niece as her attorney. It was later discovered that the attorney had used £72,000 of Mrs Buckley’s funds to set up her own risky reptile breeding venture, with further money being withdrawn for the attorney’s own personal benefit. It was estimated that the estate had incurred a total loss of approximately £150,000. An application to revoke the LPA and the niece’s appointment as attorney was successful.
Senior Judge Lush used this opportunity to clarify the responsibilities of attorneys and issue guidance for making investments to those managing the affairs of elderly people. He stated “Managing your own money is one thing. Managing someone else’s money is an entirely different matter”. He remarked that when determining the suitability of a potential investment the elderly person’s age and life expectancy are vitally important.
Most people who make LPAs are elderly, therefore the type of investments that can be seen to be made in their best interests are dramatically different compared to someone who is middle aged. Senior Judge Lush suggested that short-term investments are the most appropriate strategy for those over 80 years of age or with a life expectancy of less than 5 years. He stressed that these investments should generally be limited to cash deposits or gifts.
Judge Lush also emphasised that an attorney or deputy will not be able to make an investment purely on the basis that the elderly person would have made it themselves had they the capacity to do so. Rather the test is whether the investment is in the best interests of the elderly person; in accordance with s.5 of the Trustee Act 2000, the attorney/deputy must take proper advice from a qualified person must be taken before making the investment.
Re: Buckley demonstrates that attorneys and deputies have very little flexibility when it comes to making investments for the very elderly. They should be careful when making these decisions and take proper financial advice prior to investing, or they may face legal action and removal from their post. It also highlights the extent to which LPAs are supervised by the court of protection: donors who do not wish their attorney’s to be subject to this level of supervision should consider other ways of giving authority to their loved ones in case of loss of mental capacity.
If you have are interested in making an LPA or have any queries regarding later-life planning contact Rosalind Watchorn Solicitors today to discuss your situation. For a free initial meeting with one of our solicitors telephone: 0114 229 0160.
Based in leafy Nether Edge we specialise in conveyancing; wills and probate; tax planning and elderly advice.