Attorneys are people chosen to act on behalf of an individual (the donor) under a Lasting Power of Attorney (LPA). The attorneys become active in their role if a donor has lost the requisite mental capacity to make decisions for themselves.
A loss of capacity can be caused for various reasons such as injury, poor mental health or a form of dementia.
This article focuses on the appointment of attorneys under a LPA for financial decisions.
It is very important that the most appropriate attorneys are chosen to be appointed under such a LPA as they will be acting on the donor’s behalf when the donor is at their most vulnerable.
The donor should appoint attorneys who are trustworthy, reliable and responsible. Often individuals choose spouses, children, family members and close friends to act as their attorneys.
Where, however, a donor has a significant and complex estate it can be of even greater importance that the most appropriate attorneys are chosen.
For example, if a business man or woman with various business assets and interests was to lose mental capacity he or she would need attorneys who were able to represent their best interests at board level of a company or within a partnership.
In such a situation it may be appealing for a donor to appoint a fellow director, shareholder and/or partner to be his attorney. This may not, however, be the most sensible approach.
Such an appointment may lead to a conflict of interests as the attorney may not be able to represent their own and the donor’s best interests at the same time.
It may be more advisable for the donor to appoint an independent expert in that field of business to be their attorney. The attorney is obliged to always act in the donor’s best interests and not to consider the interests of other directors, shareholders and/or partners.
It is possible for a separate LPA for financial decisions to be put in place in respect of each business interest a donor has. This can be advisable if different attorneys would best serve the interests of the donor in relation to the different respective business interests.
Attorneys who are appointed to specifically deal with particular business assets and interests must hold a high degree of skill, expertise and knowledge in that area of business.
The attorney could be someone who has practised in that area of business before, a business consultant or a solicitor or accountant who has experience in such matters.
Where a person has a significant and complex estate with business assets they must carefully consider the appointment of attorneys for their various business interests.
Specialist legal advice should be taken on this matter. The Private Wealth Team at Goughs is well placed to provide this advice.