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LPAs – gifts by attorneys

Giving attorneys the power under an LPA to make gifts to others and themselves can invalidate it, the Office of the Public Guardian (OPG) has ruled in a test case. The law limits the power of attorneys under an LPA to make gifts to themselves or others, but how is it applied in practice?
 
The OPG brought a number of cases concerning LPAs, each including provisions that the attorney should be able to use the donor’s funds to benefit someone other than the donor.
 
At issue for the CoP was whether the provisions were valid; or invalid as to authorising gifts contrary to s12 MCA 2005; or valid, as instructing attorneys to provide for persons whom the donor has a legal obligation to maintain. 
 
Where the person intended to benefit is also the attorney themselves, the CoP also had to consider the validity of the provisions in view of the fiduciary duties of attorneys, the conflict of interest (authorised by the donor) and the donor’s best interests.
 
The CoP set out the legal framework. It concluded that there was no basis on which to limit the parameters of ‘best interest’ considerations so that an attorney can only use a donor’s funds to benefit someone else if, ‘in doing so the benefit is meeting the “needs” of a type the donor might be expected to provide for, or otherwise’.
 
The court’s rationale included that the concept of ‘best interests’ is recognised as wide enough to encompass altruism; and altruism goes beyond doing what someone might be expected to do to meet another’s needs.
 
The CoP made a number of general conclusions: 
  • Provisions in an LPA that allow attorneys to use the donor’s funds to benefit persons other than the donor are not invalid as purporting to authorise gifts in contravention of s12, as long as they are not linked to a ‘customary occasion’ (s12(3)).
  • Such provisions are not valid if/because they relate to provision for a person whom the donor has a legal obligation to maintain.
  • Such provisions may be valid as a written statement of the donor’s wishes if they are expressed in precatory terms, but they would be ineffective as part of an LPA if expressed in mandatory terms.
  • Provisions that provide for attorneys to use the donor’s funds to benefit the attorney themselves are not invalid because of fiduciary obligations.
  • Such provisions are valid because any conflict has been authorised by the donor and the attorney must in any event act in accordance with the donor’s best interests.
These conclusions are to be applied in the daily context of lay people making arrangements for the management of their funds and acting as attorney. Re Various Lasting Powers of Attorney [2019] EWCOP 40.
 

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