Accounts and professional help in your LPA

Your attorneys must keep accounts of your money, but nobody checks them unless someone asks. Three preferences in our LPAs bring in outside help and a second pair of eyes. One asks for a tax accountant to do your tax return. One asks your attorneys to send yearly accounts to people you choose. One lets them pay a professional adviser from your money.

This guide is one of a series on the preferences and instructions our LPAs offer.

Who will do my tax return?

What it does. Your attorneys ask a tax accountant to prepare your tax return each year. You can name the accountant you already use. This preference is for your property and financial affairs LPA.

Why it helps.

• It keeps things as they are. If an accountant already knows your affairs, your attorneys can carry on with them.
• It takes a hard job off your attorneys. Most people are not tax experts. Mistakes can mean penalties, paid from your money.
• It adds an outside check. An accountant sees your income and some of your spending every year. Odd figures are more likely to be noticed.

Who else will see how my money is spent?

What it does. Your attorneys send a yearly account of your money to the people you name. That might be a brother or sister, an adult child, or a trusted friend.

Why it helps.

• Someone outside can see what is happening. Once you lose capacity, you cannot check your own bank statements. A named person can.
• It answers the confidentiality question in advance. Attorneys must normally keep your affairs private. This preference shows you wanted these people to see the accounts.
• It protects honest attorneys. Regular accounts sent to the family make it much harder for anyone to accuse them later.
• It means accounts actually get kept. An attorney who knows the figures will be read is more likely to keep them up to date.

Can my attorneys pay for professional advice?

What it does. Your attorneys may employ a suitably qualified professional adviser on any part of your property and financial affairs. The adviser is paid from your money. This includes things that would not normally need professional help.

Why it helps.

• Your attorneys do not have to struggle alone. They can ask an accountant, a solicitor or a financial adviser when they are unsure.
• It settles who pays. Nobody has to wonder whether you would have wanted your money spent on advice.
• It suits careful attorneys. Some people worry about getting even simple things wrong. This lets them check first.

Two limits still apply. The cost must still be in your best interests, so attorneys should not run up bills for no good reason. And an adviser gives advice. Your attorneys still make the decisions, unless your LPA clearly lets them hand a decision to someone else. If you want an investment manager to run your investments, see our guide to investments and money in your LPA.

What the law and official guidance say

The Mental Capacity Act Code of Practice says: Property and affairs attorneys must keep accounts of transactions carried out on the donor’s behalf. For simple affairs, a record of the donor’s income and expenditure (for example, through bank statements) may be enough. GOV.UK tells attorneys they must keep records of your actions and keep the donor’s money and property separate from your own, unless you already share a bank account.

But keeping accounts is not the same as anyone reading them. The Office of the Public Guardian can ask to see them, but only if it knows to ask. The Code suggests a solution. Donors may like to appoint someone (perhaps a family member or a professional) to go through their accounts with the attorney from time to time. It says this might help to reassure donors that somebody will check their financial affairs when they lack capacity to do so.

The Code also says attorneys must keep your affairs confidential. One exception is where you agreed beforehand that information could be shared, for example, they have named someone they want to check their financial accounts.

On outside help, the Office of the Public Guardian’s guide says attorneys can still claim reasonable expenses, such as postage, travel costs and the cost of an accountant preparing annual accounts. Its examples for a property and financial affairs LPA include sending annual accounts to the donor’s brothers and sisters, and instructing a tax accountant to prepare the annual tax return. The Code says an attorney may seek professional or expert advice, but cannot generally let someone else make a decision for them.

Without these clauses

• Nobody may see the accounts. If your attorney is also your only close relative, nobody else may see your bank statements for years.
• Family members may be refused. An attorney who wants to share the figures may worry about breaking your confidence.
• Your attorney may do the tax return themselves. That is allowed, but mistakes are easy to make.
• Paying for advice can cause arguments. Relatives may question an adviser’s bill, especially for routine work.

What happened in Re JL

JL was born in 1938 and lived in her own home in Essex. She had Alzheimer’s disease [4] [7]. In October 2013 she made an online property and financial affairs LPA. Her daughter AS drew it up, and JL appointed AS as her only attorney. JL had no independent advice [8] [9]. The LPA was registered in December 2013 [11].

What went wrong. Within months, the council reported concerns to the Office of the Public Guardian [13]. JL’s bank statements showed excessive and uncharacteristic withdrawals. Between January and April 2014 there were 25 cheques paid to cash, totalling £4,290. JL’s only savings had halved to £10,669. JL was paying for her daughter’s phone contract, while other bills went unpaid [13]. JL told her social worker that her attorney kept her so short of money that she saw prostitution as the only way out [13].

AS admitted she had kept no proper records. Senior Judge Lush recorded that She admits that she failed to keep proper accounts and financial records. [22]. AS said she did not know she had to keep accounts and had not read the declaration she signed on the LPA form. That declaration included a duty to keep accounts and financial records [23]. The judge said This admission is damning enough [24].

AS explained the extra spending by saying there is no point in her being the wealthiest woman in the graveyard [22]. The judge called this trite. He said JL’s money should be applied for her benefit and in her best interests [25].

What the court decided. The judge found that AS had acted outside her authority and against JL’s best interests. He also found that JL could no longer revoke the LPA herself. So he revoked it [33]. The council’s deputyship officer was appointed to manage JL’s money instead [34].

The lesson. JL’s attorney kept no accounts, and nobody else was looking at the money. The problems came to light only because social services became involved. By then half of JL’s savings had gone. We cannot say any clause would have changed what AS did. But an attorney who knows someone else will read the accounts each year is in a very different position.

Preference or instruction?

All three clauses are preferences. The official guide says preferences are what you would like your attorneys to think about: Your attorneys don’t have to follow them but should bear them in mind. That gives your attorneys room to adapt. For example, they could change accountant if yours retires.

The guide gives its own annual-accounts and tax-accountant examples as instructions, which attorneys must follow. If you want a firm rule, such as accounts that must go to your brother every year, a solicitor can talk you through writing it as an instruction. If several family members are involved, our guide to consulting family and attorneys may also help.

This article is for general information and is not legal advice. If you are worried about how an attorney is handling someone’s money, please get in touch.

Sources

• LP12: Make and register your lasting power of attorney, Office of the Public Guardian. Expenses, example instructions, and preferences.
• Manage a lasting power of attorney, GOV.UK. What attorneys must and must not do.
• Mental Capacity Act 2005 Code of Practice on GOV.UK. Chapter 7, paragraphs 7.39, 7.61, 7.64 and 7.67.
• Mental Capacity Act 2005, section 22 on legislation.gov.uk. The court’s power to revoke an LPA.
• Re JL (Revocation of Lasting Power of Attorney) [2014] EWCOP 36 on Find Case Law. Senior Judge Lush, 9 October 2014.
• Re JL (Revocation of Lasting Power of Attorney) [2014] EWCOP 36 on BAILII