OPG decides on Test Cases for wording of LPA’s regarding gifts…
28 November 2019 by Andrea Godfrey
The Office of the Public Guardian (“OPG”) recently submitted to Court a group of test cases which were 11 Lasting Powers of Attorney’s (LPA’s) that had been sent for registration but which the OPG had concerns about as to the effectiveness and lawfulness of some of the provisions within the LPA.
Chiefly, the provisions in the LPA’s where ones mandating – I.e. saying that the appointed attorney must make a monetary payment for the benefit of a third party and these mostly related to the donor’s family such as children and grandchildren etc. and in one case it was even the attorney themselves who was to benefit. The OPG as a result of the test cases has now issued clear guidance on the matters.
The Mental Capacity Act 2005 (MCA 2005) sets out restrictions which an LPA can specify. When the OPG receive the LPA they have to decide whether such restrictions are ineffective, or would they make the LPA invalid. They can then cut out (sever) the provisions they do not agree to and allow the document to be registered or simply order the OPG not to register the instrument at all. An example would be a clause that allows the attorney to make gifts that exceed those set out in statute or a clause that for example allows the attorney to change the donors Will (this is not allowed under any circumstances).
In her judgment HHJ Hilder answered specific questions that the Court had been asked to determine:
- If the provisions are for gifts to another person which are against the principles of the MCA 2005, are they valid? The Court ruled that they are not invalid as long as they are not linked to a ‘customary occasion’ as defined by the Act (e.g birthdays and weddings).
- Are they valid if they relate to gifts which are to a person the donor has a legal obligation to maintain? The Court found that they are not valid simply if and because they relate to such a person.
- Provisions within an LPA that provide for funds to benefit persons other than the donor may be valid as a written statement of the donor’s wishes but they must be expressed as a wish, however they are ineffective if expressed in mandatory terms;
- provisions that allow the donor’s funds to benefit the attorney themselves are not invalidated by the attorney’s fiduciary obligations to the donor; and
- provisions to use the donor’s funds to benefit the attorney are not invalid because of a conflict of interest as it has been authorised by the donor and the attorneys always have to act in the donor’s best interest anyway.
The provisions contained in an LPA are very important because if incorrectly worded they could invalidate the LPA and mean that it will not be registered. It is therefore very important to consider taking legal advice in respect of LPA’s. Please contact one of our team members if you would like further advice, call 01206 700113 or email [email protected]