Category: News Stories

Lasting Powers of Attorney – How do You Know When to Act?

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A recent article published in the Sunday Times told the sadly all too familiar story of an elderly person being scammed out of significant amounts of money. And even more sadly, she could have been protected.

The fraud was discovered when the octogenarian suffered a collapse at home and her daughter decided it was time to act as her mother’s attorney under the financial lasting power of attorney (LPA), which had been set up some years beforehand.

Unfortunately, by the time the daughter gained access to her mother’s accounts she found some serious anomalies and tens of thousands of pounds were ‘missing’; various direct debits had been set up to companies that the daughter did not recognise and a five-figure credit card debt was also unfathomable to both mother and daughter. The mother could not remember what, when or why the monies had gone out of her accounts and what any of the payments were for.

The story was one of a fiercely independent woman who assured her daughter that she was able to cope and a daughter who desperately wanted to believe her. But, in all likelihood, scammers all-too-readily recognised the mother’s mental frailty and took full advantage of it.

It’s a very sad story, and one which many people with aging parents probably fear happening to them.

Lasting powers of attorney – not an infallible safety net

A lasting power of attorney for property and financial affairs allows a trusted person (the attorney) to make decisions about finances for someone who can no longer handle such things as paying bills, selling a property or managing bank accounts.

Attorneys have a legal duty to act in the best interests of the donor (the person who creates the LPA) and, whenever possible, must involve the donor in any decision making process about money. However, the difficulty for attorneys is knowing when to intervene. If the donor is adamant that they are able to manage their finances and don’t need assistance, many attorneys (frequently the sons and daughters of donors) will take the decision not to ‘meddle’ in the donor’s affairs.

But, as the story mentioned above informs us, vulnerable people can easily be targeted by scammers and the thieves will use all manner of falsehood to con people out of their money.

Action Fraud, the City of London Police crime reporting service, says that since the coronavirus pandemic began more than £14 million has been stolen in related scams. Reports of fraudsters pretending to be from HMRC, the police and various other authority figures have been made.

Not meddling – but money minding

The question of intervention in a parent’s financial affairs can be a really tricky one, but if you propose actions as protection rather than intrusion your assistance may be more welcome. By helping a donor understand how fraudsters operate, you may be able to convince them that your support would be useful and there are a number of practical measures you can take to tackle the sort of unwanted approach that vulnerable people might be caught out by.

However, an elderly person may be reluctant to ask you, as their attorney, to take over, because they may feel that once you act on their behalf there will be an automatic assumption that they have lost mental capacity. This could be devastating, as it could perhaps be one of the last bits of independence they have.

If you have been named in a valid LPA, you can of course take over a donor’s financial affairs when the donor has lost mental capacity, but it is also possible to act in a supportive role under a financial LPA, while the donor still has mental capacity. This could mean that the donor understands the decisions you are making on their behalf, but they perhaps just require your assistance with certain aspects of their finances.

It is possible for a donor and their attorney to act in this way, provided the donor made the appropriate election when they prepared their financial LPA. If you are acting as an attorney in that instance, you are acting with the donor’s consent, and at any point, the donor can revoke that consent if they wish to do so. This can be of some comfort to a donor as they won’t be relinquishing all control. If the donor makes such an election in their LPA when it is prepared, it can make the LPA much more useful for both the donor and you, as their attorney. It also means your intervention might be perceived as useful assistance, rather than taking away the donor’s independence.

Donors and attorneys working together

If the LPA is registered with the donor’s bank, the donor could, for example, request that copy bank statements are sent to you, as their attorney, so that you can review them together or so that you are able to keep a careful eye on payments leaving the account. This means that any fraudulent transactions on an account might be spotted quickly and limit the potential harm caused. It could also be possible for you, as an attorney, to have internet banking capabilities if the donor prefers, and you could assist with making payments or checking balances in this way. This is a service which has almost certainly been of great use to some vulnerable people who have been required to “Shield” due to COVID-19.

Considering the donor’s feelings

As an attorney, any action you take must always be with the best interests of the donor in mind and you should always consider the donor’s past and present feelings. And this is when the decision to act often becomes tricky for the children of donors, because the donor might be reluctant to accept your help. However, if you believe that the donor no longer has the mental capacity to look after their finances themselves, as an attorney you can intervene at this stage.

Ultimately, if it is necessary to intervene or perhaps if the donor has requested that you assist them (with their consent) you will need to register the LPA with a financial institution before they will discuss any account matters with you. A bank will require a certified copy of the LPA in order to grant you access to the donor’s accounts and it can take some time for documents to go back and forth if you are using the postal service.

Recent digital technologies have been put in place to make it simpler for attorneys and donors to share LPA details with organisations and the “use a lasting power of attorney” service, launched by the Office of the Public Guardian on 17 July 2020, means that when a donor registers a new LPA they can utilise an online tool which provides a personalised access code. This code can then be given to an organisation, such as a bank, and the organisation will then be able to view a summary of the LPA online so they can verify that the attorney has power to act for the donor. This means that the attorney can make checks much more quickly if they believe there could be a problem.

What about deputyship?

And lastly, if it’s too late to set up an LPA because your loved-one has already lost mental capacity, you can apply to the Court of Protection to become the person’s deputy. A deputy’s powers in relation to the affairs of the person who has lost mental capacity are similar to that of an attorney, but there are rigorous controls and reporting procedures incumbent upon a deputy and the application process is complex and more costly.

In our opinion, it is always preferable to put set up an LPA before mental capacity is lost, particularly as it allows the donor to choose who they would like to appoint as their attorney, rather than a court deciding who they believe is best placed to act on their behalf.

Speak to a solicitor today

If you wish to put a lasting power of attorney in place or you need to make a deputyship application to the Court of Protection, our experienced solicitors can assist you and make sure the whole process is conducted accurately and as quickly as possible.

For further information or to make an appointment with a member of our legal team, please email enquiries@wellerslawgroup.com or telephone 020 8464 4242.

Don’t Leave It Too Late to Put Your Affairs in Order

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People often talk about putting their affairs in order but then sit on their hands until it is too late. The serious consequences of delay in seeking legal advice were underlined by a case in which a woman waited until she was resident in a hospice, terminally ill with cancer, before instructing a solicitor to prepare her will.

The woman signed her will 10 days before her death. Her main asset was a house she jointly owned with her mother, who survived her by about four years. An issue of great significance, however, later arose as to whether they owned the property as joint tenants or as tenants in common.

If they held the property as joint tenants, the principle of survivorship applied and, on the woman’s death, her half share passed automatically to her mother. In that event, the property formed part of the mother’s estate when she died and the entirety of the proceeds of its sale – more than £400,000 – fell to be distributed in accordance with her will. If, on the other hand, they held the property as tenants in common, the woman’s share of the property fell into her own estate.

On the same day that the woman made her will, she signed a notice which purported to sever her and her mother’s joint tenancy, thereby converting it into a tenancy in common. A letter containing the notice was sent to her mother by registered post. A few days after the woman died, however, the letter was returned undelivered.

Against the background of those unfortunate events, the executor of the mother’s estate launched proceedings. Half the proceeds of the property’s sale were held in a solicitors’ account pending a judicial resolution of the matter.

The High Court noted that the non-delivery of the letter meant that the mother had not been served with the notice. That deficit had not been cured by a letter sent to the mother by the Land Registry four days before her daughter died. The joint tenancy had therefore not been validly severed and the Court ruled that the entirety of the proceeds of sale formed part of the mother’s estate.

Contact us to find out how we can help you with wills or estate planning.

Estate Planning and Presumption of Advancement (or making sure your intentions are upheld)

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Advancement, as a legal principle, is a gift given during an owner’s lifetime, typically referring to real estate or large assets gifted by the transferor (title holder) to a transferee – “one day, this will all be yours” is the phrase that springs to mind.

Presumption of advancement occurs within specific relationships and the principle originally arose because wives could not hold legal title and fathers were morally predisposed to “advance” the prospects of their children. In English and Welsh law presumption of advancement occurs only between fathers and children, husbands and wives, a man and his fiancée

All other circumstances involving transfer of property are treated as resulting trusts (in the case of property) and resulting loans (for money).

Presumption of advancement was set to be abolished under section 199 of the Equality Act 2010, but has yet to be ratified and further attempts to end the legal principle, such as in 2016 when the private member’s bill entitled Family Law (Property and Maintenance) was entered into parliament, have failed.

But the issue of presumption of advancement and resulting trusts are knotty legal issues which can lead to acrimonious legal disagreements between families, so it’s always best to understand the ramifications and do as much as you can to prevent misunderstandings regarding money and property.

Presumption of advancement and resulting trust in English courts

In English law, it is presumed that when property is passed between individuals it is a gift – there is a presumption of advancement. In the event of a failure of the transfer (in cases of relationship breakdown and intestacy, for example) and where there is no evidence to support that the transfer was intended as a gift, the principle of a presumed resulting trust will be applied. Any litigation which takes place to restore the property to the transferee will need to clearly demonstrate evidence of advancement (it was given as a gift) or a court might rebut the principle if evidence is provided to show that no such gift was intended.

In some jurisdictions, for instance Canada, courts have been reluctant to uphold the presumption of advancement, particularly in cases relating to adult children. In Pecore v Pecore  2007 SCC 17 the court held that the presumption should not apply because the obligations of parental support typically end when the child is no longer a minor. The case created a principle in Canada in respect of gratuitous transfers to children being a presumption of advancement only if the transfer was made by a parent to a minor child.

Conversely, English courts are perhaps more likely to uphold the principle. In Wood v Watkin [2019] EWHC 1311 (Ch) it was found that although the transferee was an adult child, a presumption of advancement could arise. And in Kelly v Kelly [2020] 3 WLUK 94, a lack of documentary evidence to support the father’s claim that the purchase of a property for his son was a loan led to the court being unable to rebut the presumption of advancement. The father’s evidence was found to be inconsistent, with no mention of the purchase being a loan in any documentation that could be provided to the court. Witnesses gave evidence in support of the father’s claim that the purchase had been a loan, but the court found that this was after the fact

Documenting gifts and transfers

What the above cases highlight is that despite some solicitors suggesting that presumption of advancement can easily be disproved in English courts, a court is unlikely to rebut the principle without clear documentary evidence.

Ensuring that the intention behind any transfer of property or money is recorded accurately and adequately may not sound like a difficult thing to do, but it can be an emotionally fraught act. You may feel that your situation is clear, but in many a lawyer’s experience, these things are not always as straightforward as you would believe.

Loans and property transfers between family members can quickly result in differing opinions about the initial intentions and it is a surprisingly familiar story that a parent considered a money transfer a loan, while the child believed wholeheartedly that it was a gift. If evidence cannot be supplied to support the express intention of a transfer, litigation can be drawn out, complex and ultimately extremely costly both emotionally and financially.

Our tip: always document any transfer of money or property, especially if you cannot afford to lose the funds. If you are letting your child live in a property that you own, but that you fully intend to sell in order to fund your retirement, then this needs to be documented. If you are lending your child a sum of money so they can buy a house, but you cannot afford to gift them the money, you should draw up an agreement which sets out the terms of repayment.

How Wellers Can Help

Our website section on the Bank of Mum and Dad contains lots of information on how to go about drawing up a legally binding agreement, such as a declaration of trust and a family loan agreement. We also look at the choices you have in respect of gifts and loans and other ways you can help your children to get on the property ladder.

In circumstances where you wish to ensure that money or property is divided fairly after your death and you have allowed one child to borrow money or live in your home during your lifetime, your Will is the main document that will ensure this happens after your death. Drawing up a Will that is appropriate for your needs and wishes is a crucial estate planning tool in such circumstances. Wellers Will writing service provides a range of Wills suitable for complex family situations and we are able to tailor each type to your specific needs.

If you find yourself in a position where you believe assets or property, promised to you have been left to a third party, our litigation team will be able to help you understand your options. Please call on 0208 464 4242 for our Bromley office, 020 7481 2422 for London and 01372 750100 for our Surrey offices.

Court Urges Peace on Unmarried Couple at War Over Family Business

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Unmarried couples should be under no illusions that they do not have legal rights equivalent to those who have tied the knot. The point could hardly have been more powerfully made than by a case concerning an unmarried former couple whose close-knit life together yielded three children and a family business.

During their relationship, the couple were the sole directors and equal shareholders of a company that ran a vehicle repair and MOT garage. Had they been married, the value of the business would have formed part of the financial pot to be divided between them on divorce. As their relationship was never solemnised, however, the option of divorce proceedings was not open to them.

After the relationship ended, the man took steps to transfer the company’s business to a new corporate vehicle which he wholly owned. He did so without the woman’s agreement. She responded by launching unfair prejudice proceedings under Section 994 of the Companies Act 2006 on the basis that he had, by his unilateral move, unfairly prejudiced her position as a shareholder.

Ruling on the matter, the High Court noted that the man did not dispute that claim and had been ordered to purchase the woman’s 50 per cent shareholding in the company. The value of that shareholding was, however, not agreed and there was a risk that the costs of the proceedings would be disproportionate to the modest value of the business.

After hearing expert valuation evidence, the Court took a broad-brush approach to the issue and found that £45,500 represented a fair price that the man should be required to pay for the woman’s shares. Noting the commercial realities of the dispute, however, the Court urged the couple to settle their differences.

The woman could only receive what the man was able to pay and forcing him into bankruptcy would be futile. A fair division of their joint assets in a manner that secured both of their futures, and most importantly that of their children, would ultimately be in the best interests of all concerned.

If You Believe You’ve Been Sold a Pup, Consult a Solicitor Today

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If you have paid good money for goods or services and feel that you have not got what you bargained for, you should see a solicitor without delay. A case on point concerned a man who paid about £4,000 for what he believed would be a surgical hair transplant but got what he viewed as a toupee.

The man underwent what was described as a step-by-step hair replacement which involved samples being taken from his scalp and matched to a fine mesh of human and synthetic hair that was later attached back onto his head using a bonding solution. He said that the result looked like a hairpiece and that he suffered an asthmatic reaction to the bonding agent.

Taking legal action against the company that provided the treatment, the man alleged that he was specifically reassured at a preliminary consultation that what he received would not be a wig. He claimed he had been misled into believing that he was to undergo a hair transplant. He was distraught to the point of tearfulness when that turned out not to be the case.

The company argued that he was advised at length about the nature of the treatment that he was to undergo and should have been under no illusions. The non-surgical hair grafting procedure was accurately described as hair replacement and there was never any suggestion that he would receive transplant surgery involving hair follicles.

Upholding the man’s claim, however, a judge found that he had given a truthful and compelling account of what he was told during the consultation. He contracted with the company on the basis that what he received would not be a wig. He was entitled to effectively rescind the contract and to claim his money back. Together with damages and interest, his total award came to £5,887.

Disappointed Homebuyers Secure Six-Figure Damages From Negligent Surveyor

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One good reason why sensible homebuyers engage the services of a surveyor prior to purchase is that, if things go wrong, they at least have someone to sue. In a case on point, a couple who paid £1.2 million for a seaside home which turned out to be riddled with defects won six-figure compensation from a negligent surveyor.

The property had been largely rebuilt in the months before the couple bought it. They instructed a surveyor to conduct a non-structural inspection. He reported potential problems with drainage, rainwater pipes and gutters. In the light of his report, the purchase price was reduced from £1.24 million prior to completion.

After the couple moved in, it swiftly became apparent that the property was riddled to a remarkable extent with defects of varying severity, many if not all of which would not have been observable by a surveyor performing a non-structural survey. By far the most serious problem, however, was damp ingress.

After the couple launched professional negligence proceedings against the surveyor, the High Court noted that its task was to decide whether he fell below his normally high standards in reporting on the property’s condition. He had carried out numerous damp readings during the inspection, none of which revealed any problem.

He had, however, breached the duty he owed the couple in failing to report that he could not see visible damp proofing and that further investigations were required. He was also negligent in failing to advise the couple that they should obtain a professional consultant’s certificate in order to establish that the rebuilding works had been carried out to a satisfactory standard.

The Court found that, had the surveyor’s report contained the advice that it should have done, the couple would never have bought the property. Their damages thus stood to be calculated on an assessment of the difference in value between the property with the defects as reported by the surveyor and its value with all the defects which in fact existed.

Calculating the diminution in the property’s value by reference to the cost of demolishing and rebuilding it, the Court found that the couple were entitled to £750,000. Giving credit for sums that they had already received from third parties, the Court awarded them a total of £389,000. That included £15,000 to reflect the distress and inconvenience that they suffered.

Independent Legal Advice Proves Decisive in Family Inheritance Dispute

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Just because someone is old, frail and vulnerable does not mean that they are incapable of understanding the contents of their will. However, as a High Court ruling in the context of a bitter inheritance dispute showed, the benefits of professional advice become all the greater as the inevitable effects of old age begin to bite.

The case concerned a mother who was in her 80s when she made a new will leaving her estate, which had a gross value of about £325,000, to one of her daughters and nothing to the other. In a contemporaneous written statement, she explained that the daughter who did not benefit under the will had broken off contact with her.

The daughter in question denied that that was the case and challenged the validity of the will on the basis that her mother was prey to undue influence brought to bear upon her by the beneficiary. She also asserted that, due to her age and vulnerability, her mother neither knew nor approved the contents of the will.

Ruling on the matter, the Court acknowledged that the mother was very frail when she made her will, suffering from various health problems which affected her sight, hearing and mobility. The will was, however, drafted by a solicitor who interviewed and advised her in the absence of the beneficiary. On the advice of another solicitor from the same firm, she obtained her GP’s confirmation that she had the mental capacity required to make a valid will.

Allegations that the mother was terrified of the beneficiary were rejected. Although she had, by a previous will, left her estate equally between her children, the change in her wishes was readily explained by the breakdown in her relationship with the other daughter. Evidently, the daughter did not like being disinherited but that did not mean that there must have been undue influence.

The care taken by the lawyers who advised the mother in the end proved decisive. The solicitor who interviewed her on her own was not acting for anyone else and satisfied herself by inquiry that the mother wished only one of her daughters to benefit from her estate. The validity of her final will was upheld.

Please do get on contact if you need a solicitor to draft your will, we have a number of highly experienced specialist wills lawyers.

Ambiguity in Widower’s Poorly Drafted Will Results in Family Stalemate

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The whole point of engaging a professional to draft your will is to make your wishes clear in precise and unambiguous terms. If your will falls below that high standard the result, as a High Court ruling showed, can be family stalemate after you are gone.

The case concerned a widower who died without children, leaving an estate worth over £600,000. By his will, he made some modest charitable gifts and bequeathed the remainder to ‘such all of my nephew’s and niece’s children’. It was agreed that the apostrophes in that phrase were misplaced and that he had not intended to benefit the children of only one niece and one nephew.

As at the date of his death, there were seven children of his nieces and nephews by blood who were clearly entitled to inherit under the will. However, an issue arose as to whether he had also intended to include the eight children of his deceased wife’s nephews and nieces in the class of beneficiaries. With the consent of all concerned, that issue was submitted to the Court for determination.

Ruling on the matter, the Court noted that, as a matter of strict and proper English, the words ‘nephew’ and ‘niece’ describe the son or daughter of a brother or sister. It was, however, permissible to consider the background context in deciding whether the words as used in the will were intended to have a wider meaning.

The Court noted that the man and his wife had been married for 46 years and that she had left him the whole of her substantial estate. In all their previous wills, they had benefited their own and their spouse’s blood relatives equally. The man made his final will only eight months after his wife’s death.

In ruling that the beneficiaries of the man’s will should include the children of his nieces and nephews by marriage, the Court found it unlikely that he would have wished to disinherit his wife’s family so soon after her death and for no apparent reason. His estate thus stood to be divided between 15 beneficiaries.

The Court noted that the crucial clause of the will contained grammatical and punctuation errors and was poorly drafted. The difficulty that had arisen could very easily have been avoided had the beneficiaries been specifically named. The case graphically illustrated the dangers of giving instructions for the drafting of a will over the phone, rather than to a solicitor face to face.

Object to a Planning Decision? A Lawyer Will Ensure Your Voice Is Heard

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If you object to a planning decision, an expert lawyer will ensure that your voice is heard loud and clear. In one case, a woman succeeded in overturning planning permission for the construction of 18 holiday lodges close to her rural home.

The local authority enabled the development by granting consent for the change of use of a greenfield site. It did so on the recommendation of planning officers, who pointed to the project’s economic benefits. They also stated that the lodges would not be visually obtrusive or significantly harm the area’s rural character.

The lodges fell within the statutory definition of static caravans and each of them could measure up to 20 metres long, 6.8 metres wide and 3.05 metres high. The applicants for permission said that the lodges would be clad in weatherboarding and a wood-stained finish to help assimilate them into the countryside.

Members of the council’s planning committee were advised by an officer that, as consent was only sought for a change of use, a request for further details in respect of the lodges’ design would not be justified. However, in upholding the woman’s judicial review challenge, the High Court reached the firm conclusion that that advice involved an error of law.

The nature of the application did not prevent the council from exercising planning control over the design of the proposed holiday lodges. At least some members of the committee were troubled by the design issue and it was some measure of their concern that councillors deferred making a decision on the application when it first came before them.

In quashing the permission, the Court found that, had the committee been correctly advised, it was highly likely that it would have exercised planning control by, for example, imposing a condition regarding the external materials to be used in the lodges’ construction. Given the limited design information submitted with the application, there was a very real likelihood that councillors would at least have requested further information in that respect before reaching a decision.

Don’t Even Consider a Foreign Adoption Without Specialist Legal Advice

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Adopting children from abroad can complete families and be of great benefit to all concerned. However, as a High Court case showed, it is fraught with legal pitfalls and should not be attempted without first taking specialist legal advice.

The case concerned a British citizen who adopted a child in Iran under Iranian law. The child had thrived in the adoptive placement. The parent launched proceedings in London, seeking recognition of the adoption in this country. The Home Office opposed the application on the basis that the criteria for recognition specified in the Adoption and Children Act 2002 had not been met.

Ruling on the matter, the Court noted that Iran has not ratified the Hague Convention on Protection of Children and Cooperation in Respect of Intercountry Adoptions. It is also not one of the countries where adoption is recognised by operation of the Adoption (Recognition of Overseas Adoptions) Order 2013.

The parent was domiciled in Iran at the time of the adoption and it was not disputed that the child had been legally adopted in accordance with the requirements of Iranian law. However, the Home Office argued that adoption in Iran does not have the same essential characteristics as adoption in England and that recognition should, for that reason alone, be refused.

The effect of an English adoption is to sever the legal relationship between the child and his or her biological parents. Section 67 of the Act provides that, if an adoption order is made, the child will be treated as if born to the adopter(s). Adoption orders made in this country can only be revoked in highly exceptional and very particular circumstances and such revocations are extremely rare.

The Court noted that those principles differ starkly from the position under Iranian law, where an adoption order does not extinguish the legal relationship between a child and his or her biological father. The threshold for revocation of Iranian adoption orders is also set at a much less demanding level.

The Iranian adoption had provided the child with much-needed security and stability. However, in refusing to grant recognition, the Court observed that the case turned not on the child’s welfare but on the interpretation of the legal principles through which English law recognises foreign adoptions.

The Court observed that an application for an English adoption order in respect of the child could be made under Section 49(3) of the Act if it could be shown that the child had been habitually resident in this country for 12 months. Any interference with the human rights of the child and the parent arising from the refusal to recognise the Iranian adoption was, in the circumstances, justified.