What can an attorney pay themselves? – striking the right balance

A recent case highlights a common issue for children looking after their parents’ affairs under an Enduring or Lasting Power of Attorney.

The basic rule is clear – a power of attorney (“LPA”) can only be used to benefit the person who made it (the “Donor”). Attorneys cannot use the LPA to benefit themselves. If an Attorney has expenses, they can be reimbursed, but they can’t be paid for being an attorney unless the individual LPA provides that they can.

In the case of Re WP deceased and EP [2015] EWCOP 84, the attorneys were two of the three children of the Donors. They had been paying themselves and the other child £150 a month which they said was to cover:

  • Travel expenses
  • Remuneration for acting as attorneys
  • A “care” allowance.

The case came to court after a falling out when the two attorneys refused to pay further money to the third child.

The judge decided as follows:

  1. There was no question that the attorneys were entitled to travel expenses, although he did say they should not adopt the standard commercial rate of 45p per mile.
  1. The attorneys were not entitled to any remuneration for acting as attorneys – ie, specifically, managing their parents’ financial affairs. The parents had had opportunity, when making the powers, to provide for remuneration, and they had chosen not to do so.

Turning to the “care allowance”, the attorneys were not only dealing with their parents’ finances, but also providing significant care, including taking them to hospital appointments. It was acknowledged that it would have cost a lot more to engage professional care workers to provide that support. The attorneys also gave evidence that they could not continue all the travelling and care without some kind of contribution to expenses. In the end, the judge said that he had to strike a balance between ensuring that the attorneys were not financially disadvantaged by supporting their parents, but at the same time that they were not making a profit. He felt that the £150 a month was a reasonable balance and he approved it. He left it to the two attorneys to decide whether the £150 a month was fair payment to their sister, who was also involved in the care of the parents.

This case is a good illustration of the fine balance that often has to be struck. The law wants to protect vulnerable donors; at the same time attorneys should not suffer financially from acting as attorneys. Inevitably it is the attorneys themselves who are making decisions about what they are entitled to, so the opportunities for misuse (and for accusations of misuse) are plain. Our advice to an attorney in this situation would be to keep a full record of what exactly they are doing and any actual costs incurred, so that if the payments are challenged, they can demonstrate that the payments were reasonable.

The Myerson private client team provides specialist advice relating to powers of attorney, Wills, probate, inheritance tax planning, trusts and all aspects of family law to clients in Manchester and Cheshire.

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