What can you do if you suspect misuse of a Lasting Power of Attorney?

A Lasting Power of Attorney (LPA) is an important legal arrangement that allows someone to plan for the future by appointing a trusted individual to manage their affairs if they lose capacity. LPAs are widely used and often work well in practice. However, concerns frequently arise following the donor’s death (i.e. the person creating the LPA), where an attorney may not have acted properly or misused their position for personal gain.

There are two types of LPA. One relating to decisions about Property and Financial Affairs, and another for Health and Welfare decisions. You can have one or both, with different attorneys appointed for under each power.

The fundamental difference between the two types of LPAs is that Health and Welfare decisions can only be made by an attorney when donor lacks capacity. However, a Property and Financial Affairs attorney can make decisions with the donor’s permission, as soon as the LPA is registered. Careful thought ought to be given to the person you choose to make such important decisions.

In this article, we explain what a Property and Financial Affairs LPA allows an attorney to do, the duties they must comply with, and what steps can be taken if there are suspicions of misappropriation of funds.

What is a Property and Financial Affairs LPA?

A Property and Financial Affairs LPA enables the donor to appoint one or more attorneys to make decisions about their property and financial matters. Once registered with the Office of the Public Guardian, the LPA allows the attorney to step into the donor’s shoes in managing their finances.

Depending on how the LPA is drafted, an attorney may be able to act as soon as the LPA is registered (with the donor’s consent), or only when the donor has lost mental capacity. In either case, the scope of authority is often broad. It can include operating bank accounts, managing investments, paying household expenses, collecting pension income, and even selling property.

Because of the level of control involved, the role carries significant legal responsibilities.

The duties an attorney must follow

An attorney is not simply assisting on an informal basis; they are placed in a fiduciary role. This means they are expected to act with a high degree of honesty, transparency, and accountability at all times.

Central to their role is the requirement to act in the donor’s best interests. Decisions must be made for the benefit of the donor alone, and not the attorney or other family members.

Attorneys must also avoid conflicts of interest. They cannot use their position to benefit themselves or place themselves in a situation where their personal interests might influence their actions. For example, an attorney should not mix the donor’s funds with money of their own or arrange transactions that primarily benefit them.

Another key obligation is the duty to maintain proper records. Attorneys are expected to keep clear accounts showing how money has been managed and must be able to explain transactions if required.

There are also strict limits on making gifts. While modest gifts for customary occasions such as birthdays or Christmas may be permitted, anything more substantial is likely to fall outside the attorney’s authority unless expressly authorised by the Court of Protection.

When concerns arise after death

It is not uncommon for concerns to come to light only after the donor has passed away. Executors or administrators reviewing the deceased’s finances may notice irregularities, such as large withdrawals, unexplained transfers, or a lack of documentation.

In other cases, beneficiaries may raise concerns about the attorney’s conduct during the donor’s lifetime, particularly where there has been a breakdown in family relationships or limited transparency.

At that stage, the executors or administrators of the estate are under a duty to investigate. They are responsible for gathering in the estate assets, and that includes identifying and recovering any funds that may have been misappropriated.

Investigating potential misappropriation

The starting point is usually to obtain and review financial records. Executors or administrators have authority to request bank statements and other documentation covering the period during which the attorney was acting. A careful analysis may reveal patterns that require further explanation, such as unusual withdrawals or transfers to the attorney or third parties.

In many cases, it is appropriate to ask the attorney directly to provide a full account of their dealings. An attorney should be able to explain their actions and provide supporting records. A failure to do so, or an incomplete or inconsistent account, may strengthen concerns that something untoward has happened.

Where appropriate, it may also be possible to seek information from the Office of the Public Guardian. However, they will only become involved if the donor has lost capacity and their jurisdiction ends upon death.

Recovering funds on behalf of the estate

If there is evidence that the attorney has misused their position, the estate may have a number of legal remedies available. This may include:

• An application for a formal account compelling the attorney to provide a detailed breakdown of all transactions;
• A claim for a breach of fiduciary duty;
• An application setting aside a transaction; and/or
• Freezing injunctions to preserve the position in more urgent situations.

Many such disputes are resolved through negotiation once the evidence has been reviewed. Court proceedings can be an effective means of recovery, where necessary.

Acting promptly is key

Time can be an important factor in these disputes. Although the law does allow some flexibility in cases involving fraud or concealment, delays can make investigations more difficult and may affect the availability of evidence.

Executors and administrators should therefore act promptly in gathering information and seeking specialist advice where concerns arise.

Most attorneys carry out their role diligently and in accordance with the law. However, where trust has been abused, the consequences can be significant – not only financially, but also emotionally for families.

The legal framework in England and Wales provides clear duties for attorneys and effective remedies where those duties have been breached. If you suspect that a family member acting under a Property and Financial Affairs LPA has misappropriated funds, there are steps you can take to investigate and, if necessary, recover what has been lost.

Early advice from a specialist legal team, can make all the difference in navigating these complex and sensitive issues. Please contact the Will, Trust and Estate Disputes Team at Sintons to see if and how we can assist.