Acting as an attorney or trustee? Read on...
Jenny Ives, Senior Financial Planner and our expert in Later Life finance, unlocks some of the complexities experienced by those given the weighty responsibility of power of attorney
Attorneys are often not aware of the full scope of their duties and powers; or the restrictions and guidance they are required to adhere to as laid down in the lasting power of attorney (LPA).
You may have already been thwarted in your attempts to carry out your duties as attorney, when dealing with banks and insurance companies. While the intention is to allow you to act on behalf of another due to their incapacity (mental or physical), there is undeniably much confusion around operating and implementing the power of attorney.
As financial planners we see this confusion extended when attorneys make investment decisions that could inadvertently go against the advice of the Office of the Public Guardian.
The decisions you make in your role as attorney have to be in the best interest of the donor (the person who has asked you to act on their behalf). In arriving at your decisions, you will need to have checked the LPA for any instructions, restrictions or preferences it may contain. You should also consider the value and wishes of the donor: without making general assumptions you need to consider what decision the donor may have come to themselves. No small feat for an attorney to achieve…
However, where you are not qualified to make a decision, you should seek advice from a professional, such as a financial planner like ourselves or suitably qualified accountant or solicitor. But be mindful, attorneys and trustees are able to seek advice on decisions but are not able to delegate their decision-making – a key distinction has to be made here.
When it comes to investment decisions you may not be aware that appointing a discretionary fund manager (DFM) or discretionary investment manager could be in breach of the default terms of the power of attorney, unless it includes express permission from the donor that a DFM can be used. In our experience, this is rarely the case. A discretionary fund manager can make changes without your approval thereby inferring that you have delegated your decision-making around investing. The key difference between a discretionary fund manager and ourselves, as financial planners, is that we make recommendations to you as the attorney, that take into account all the donor’s requirements and on understanding them, you then agree to these recommendations before we implemented them.
If you would like a second opinion on the investments you look after as an attorney or trustee please contact us.