Abuse of Position of Trust – Lasting Powers of Attorney

October 7th 2015

selling a business
A recent Society of Trust and Estate Practitioners’ report has given the results of a survey by KPMG.  They have found an increase by a factor of 5 in fraud committed against elderly relatives.  Apparently £1.7 million has been stolen by younger relatives from the elderly donors of Powers of Attorney.  It seems that the fraud is most often (72%) committed by those who are over 45 i.e. those who do not feel that they need to wait for their inheritance!

Those people are clearly wrong and committing theft.  The whole basis of undertaking the role of an attorney is one of trust.  The donor’s money does not belong to the attorney.  The attorney has no say or power over the donor’s Will.

A son has just had his father’s Lasting Power of Attorney revoked by the Court of Protection’s senior Judge Lush for the reason that he committed fraud.  The attorney purchased a house in his own name from his father’s money, leaving his father’s care bills unpaid.  This is an obvious example of fraud.  A less obvious example is ‘borrowing’, meaning to pay it back, but never doing so.  In fact even temporary borrowing is a misuse of the trust that should exist between a donor and an attorney.

One wonders whether the reported cases are just the tip of the iceberg.  The writer knows of cases where very kind and well meaning attorneys have borrowed their donor’s money temporarily without any intention to permanently deprive the donor of it.  Nonetheless they have struggled to repay it or have simply failed to do so.  The police have had to be involved.

There is detailed information on the Office of the Public Guardian’s website about the role and duties of attorneys.  They should be very careful not to muddle their own money with the donor’s.  Where the donor has been in the habit of making seasonal or birthday gifts, the attorney can carry on doing this.  Nevertheless, anything more than that for a small fund, or anything more than the annual inheritance tax allowance for a larger fund, must be the subject of an application to the Court of Protection.  In other words, gifts, loans, transfers of land or inheritance tax planning exercises must have the sanction of the Court of Protection.

If you would like further information on Lasting Powers of Attorney, please contact Julia Routen at jrouten@se-solicitors.co.uk or telephone 01295 204012.

*Disclaimer: While everything has been done to ensure the accuracy of the contents of this article, it is a general guide only. It is not comprehensive and does not constitute legal advice. Specific legal advice should be sought in relation to the particular facts of a given situation.*