Distribution Of Assets Before Death

[sunny-dave]

Basic situation :

Elderly person, no longer mentally competent, properly witnessed (and not likley to be challenged) will exists, Power of Attorney has been registered/activated.

Advice please :

Person with Power of Attorney (who would also be Executor of Will) is aggrieved about some of the terms of the will (ie who gets what share) and is proposing to distribute a significant part (perhaps 50%- 75%) of the assets of the elderly person before the person dies.

Is this legal?

If the distribution does not follow the terms of the will (which I suspect it may not) do the disadvantaged legatees have any legal come-back once the will is enacted? I know they will not have the heart to do this, but it would be useful to know if they could.

Thanks

dave

[FredPuli43]

We need Barmaid. This is her field.

A Power is to be used because the subject is not capable of managing their own affairs. The attorney stands in their stead, to do what they would do if they were still capable. Prima facie what this elderly person would want to do and might do (there is no evidence given that they would distribute assets; anyway,if competent) is what is expressed in the will and if that were entirely contrary to what the attorney proposes , as you suggest, the distribution would not follow the wishes of the person . It follows that the attorney would be exceeding their powers and not acting in good faith or the interests of the person. What reason, if any, does the attorney give?

[sunny-dave]

Nicely put Fred.

The reason being propounded is "It's what **** would have wanted" ... which, as you say, there is no way of knowing other than from the will.

[dzug2]

The Attorney only has the power to act in the interest of the donor.

This is not in the interests of the donor - which are initially to have as high a standard of living as is reasonable until his death, and then for the terms of his will to be followed

So it is not legitimate - whether it follows the terms of the will or not

The disadvantaged legatees would have a comeback - though it might be difficult to enforce

They have the option now of referring the matter to the OPG who might well rescind the PoA and take over management themselves. That is not a step to be taken lightly - they are expensive and not overly proactive

[sunny-dave]

As a supplementary, which has just occurred to me :

I don't think the person will live long enough to need any of the money concerned to pay Care Home Fees - they have enough other assets to cover that for several years.

If it did turn out to be needed though, then presumably the person who distributed the money would be personally liable (rather than the recipients of the cash)?

[dzug2]

Not a legal opinion, but if the recipients know they should not be receiving the cash then might not they be liable?

[sunny-dave]

Thanks dzug2 - an interesting point - hopefully one of the legal eagles will be along soon.

[Barmaid]

Dave - I'll assume this is an LPA (if its an EPA - which was the predecessor to the LPA say and I'll find the relevant bit of legislation).

An attorney CAN make gifts but only on customary occasions to people related or connected with him or to charities and the amount of the gifts must be "reasonable and proportionate". The relevant section is s12 Mental Capacity Act 2005 - link here - http://www.legislation.gov.uk/ukpga/2005/9/section/12.

IF the attorney is of the view that the Will does not reflect the donee's current wishes, he should apply to the Court for a statutory Will.

IF he gives away the donee's estate, I consider the beneficiaries could pursue the attorney personally.

[sunny-dave]

Thanks for your reply - it's an EPA, Bramaid

dave xx

[sunny-dave]

aaaargh ooops "BARMAID"

< red face >

[Barmaid]

In that case it is covered by Schedule 4, Paragraph 3(3) of the MCA. In almost similar terms. http://www.legislation.gov.uk/ukpga/2005/9/schedule/4

Wave that bit of legislation under his nose and tell him to act properly!

[sunny-dave]

That is incredibly useful - I owe you several pints

Cheers

Dave

< PS - I hasten to add that I have nothing personally to gain/lose over this - just trying to see that 'justice' is done for a friend >

[FredPuli43]

Section 3(2) makes interesting reading too, dealing with the general principles restricting the right of the person holding the Power to benefit himself or others:

(2)Subject to any conditions or restrictions contained in the instrument, an attorney under an enduring power, whether general or limited, may (without obtaining any consent) act under the power so as to benefit himself or other persons than the donor to the following extent but no further—

(a)he may so act in relation to himself or in relation to any other person if the donor might be expected to provide for his or that person's needs respectively, and

(b)he may do whatever the donor might be expected to do to meet those needs.

[Barmaid]

it does Fred, but that is aimed at the donor's powers to maintain. He still can't dish out money willy nilly. So in circumstances where, for example, the attorney is the spouse and distributions were needed for her ongoing maintenance that would be allowed. The Court is likely to view with huge suspision a large gift to someone whom the donor was not expected to maintain.

[FredPuli43]

That's how I read 3(2), BM, as a statement of principle. He has no power to dish out money to himself or anyone else unless to the extent and in the circumstances mentioned. That's common sense and common law too, though sometimes it takes a statute like the Statute of Frauds or this one to recite it.

What does an intended beneficiary or other interested party do, to stop an abuse like the one prohibited ? Presumably he could apply, quia timet, to have the attorney removed and,in the meantime, stopped from distributing and, at a guess, the attorney would be personally liable for any act and consequent loss beforehand since his possession of them is in the nature of trusteeship. How would you go about tracing and retrieving the funds dispersed though? The offending party might be a man of straw and so pursuing him be of no benefit.