Power of attorney - do they have to act in my interests?

cockerWalker

Entirely hypothetical issue, am I worrying unnecessarily?
I've been doing some housekeeping about affairs recently and as part of that have appointed my wife as attorney for both financial and health (she's done the same with me, we both have siblings as reserve attorneys).
Looking at the requirements for an attorney, it's all very focussed on acting in the best issues of the donor. However, when we retire, it's likely that the majority of our assets and income will be in my name (mainly pension funds).

If I were to be unable to make decisions, I'd want my wife to be able to use those funds to generate income in her own interest as much as mine, exactly as will happen while I'm competent. Is there anything I can do to facilitate this, or will it just be assumed? We do jointly own a house and use a joint bank account that wages get paid into.

tacpot12

You will have a problem if the house ever needs to be sold during your lifetime. See this link for confirmation: Lasting Powers of Attorney & Joint Property | Curtis Parkinson

To solve this problem you would need to remake your LPAs for Finances so that the reserve attorneys become actual attorneys, so that there will always be two people who can sign the property transfer forms.

Your attorney cannot use your assets to generate an income for themselves. They have to act in your best interests, and that means that all your assets have to either be used to generate an income for you or be retained as capital for your benefit, and invested appropriate to your needs (and not theirs).  

The only way around this is to give your wife some of your assets, which you can do with no consideration of Inheritance Tax as gifts between spouses are exempt. With these assets, she can generate an income that is likely to meet her half of your joint living costs; Council Tax, Water, Energy, Insurance, Food etc. While you have capacity, you can mange these assets for her, but it would be wise to involve her in the management so that she can take over management of your assets if your ever need her to.

You cannot rewrite in your LPA that you want to give away a certain proportion of your income (or even your excess income) as the attorney's rights to give your money away are very strictly constrained. It's not ideal, but I'm not aware of any way around it other than gifting her enough of your assets to be able to cover all her conceivable expenses (except for Care as few people have enough assets to actually cover all of someone's potential Care needs).

Linton

This is an important point that we had not considered.  In the general case it would seem that if the donor has dependents an attorney does not have the authority to use the donor's money  to continue to provide for them.

The most obvious case is where a married couple's assets are mainly held in ISAs and SIPPS, neither of which can be held jointly.  Or if the donor receives a large % of the couple's pension income.  Do the LPA rules mean that a donor's spouse who had far less wealth in their own name along with any children, could be reduced to poverty unable to access the money that would have been used had the donor retained mental capacity?

The more one thinks about it the more the problems that could arise. Suppose the donor owns a flat lived in for free by one of their children?  According to https://www.gov.uk/use-lasting-power-attorney/property-financial-affairs the attorney would need to go to the Court of Protection to allow the arrangement to continue.

Sea_Shell

I'm sure I'd read something that would allow an attorney (spouse) to continue to provide for themselves from the donor's assets.

Am I mistaken ?


What about adult children (as attorney), being able to use the donor's assets to "keep" their other parent?

cockerWalker

Sea_Shell said:

I'm sure I'd read something that would allow an attorney (spouse) to continue to provide for themselves from the donor's assets.

Am I mistaken ?


What about adult children (as attorney), being able to use the donor's assets to "keep" their other parent?

This is the situation I'm concerned with. A SIPP in my name may end up providing two thirds of our retirement income. I wouldn't want my incapacity to reduce my wife's standard of living.
My hope is that she could just continue income going into a joint account and just carry on as normal, but the rules don't seem to especially support this.

Grey_Critic

Whilst the Attorneys are required only to act in your interests thay cannot interfere with how you manage your affairs without a Court Order.

Our LPAs name me acting for my wife as she has dementia and is unable to manage her own affairs - Our sons are listed as replacements and we discuss and agree any actions. I manage my own and wifes affairs and our sons are replacements and again we discuss and agree , 

Copies of our Wills and LPAs are held by all and and to date I have had to use the LPAs (finance) twice on my wifes behalf and informed our sons.

I have also put together a document titles **Essential Information** Which lists all our affairs. Name - Address - DOB - NI and NHS numbers - Medical information - Banking - Investments - Passwords (so much done online these days and things can grind to a halt if someone is taken ill) I also list both our sons with Insurers and such as being authorised to act on our behalf in emergencies. We also have a shared Digital Document of our finances. I also have listed where things are kept - Credit cards - Premium Bonds etc.

Took some time but we did it together and I keep it up to date - Am considering putting together a template that I can share with others.