Son given authority to gift himself £6 million from his mother’s fortune using her LPA
10 September 2018 by James Bird
Many people will be aware that a lasting power of attorney (LPA) is a legal document that allows you to appoint people (called your attorneys) to make decisions for you once you lose mental capacity. They are becoming more prominent in today’s society and more important than ever given our ageing population.
The primary duty of an attorney is to always act in the best interests of the person who made the LPA (the donor), regardless of the consequences it may have on the attorney or others. In most instances, such duties might mainly consist of relatively small actions such as paying bills and sorting insurance but sometimes transactions can be larger (such as selling property).
A recent case which has hit the news involves a mother who appointed her son as her attorney under an LPA. The mother has had dementia for a number of years but prior to this, when she still had capacity, she had made an LPA appointing her son as her attorney. The mother is living in a care home with full-time care but has significant assets which are funding this. It is estimated that her fortune lies somewhere around £18.6 million.
Recently the son has applied to the Court of Protection (the court which deals with vulnerable people and LPAs) to allow a gift of £6 million to himself for inheritance tax planning purposes. Usually, an attorney is not able to benefit by any means from their position and this can often lead to serious repercussions.
However, in this case, the son had applied to the Court of Protection for guidance and confirmation that this would be allowed. The son had taken financial advice from his mother’s long-term financial advisor who had given his support to the gift.
The official Solicitor (who represents vulnerable people) had also given their approval to the gift when looking at the case on behalf of the mother.
The matter was heard before Judge Carolyn Hilder who had approved the gift. She explained that the mother had made a Will 7 years ago under which the son was to be the main beneficiary of her vast fortune. By making such a large gift, and additional gifts totalling about £1 million to charities, this would reduce the inheritance tax liability for the mother’s estate by almost £3 million.
Usually such actions by an attorney would not be allowed, but because the application had been brought by the son with the support of the financial advisor and because the “pro’s” outweighed the “con’s”, the ruling was made to allow these gifts.
This could certainly be an important decision in respect of what attorneys are able to do when acting for wealthy donors and is something which should certainly be followed. If you are an attorney and require any advice in respect of your duties and obligations then please feel free to contact a member of our Wills, Life Planning and Probate department who can offer a fixed fee appointment. Alternatively, we offer a free 15-minute drop-in service on Thursday mornings between 10 – 1 at our Colchester, Chelmsford, Billericay and Clacton Offices.