A Power of Attorney authorises one or more other individuals to act on your behalf. Usually any other party to a transaction is only concerned to know that the Power has been properly granted. If this is the case then they can assume that the Attorney is acting in accordance with the authority that has been given to him.
However, it is crucially important that those acting under a Power of Attorney understand the powers and duties that they have. Unfortunately an increasing number of Court Cases involve questions of the legality of actions taken by Attorneys. Indeed, two such cases reached the Court of Appeal very recently. Strangely they both involved people with the surname “Day”, though they were completely unrelated.
In one case an individual had established a pattern of giving money each year to someone he had appointed as Attorney. When the individual became unable to manage his own affairs the Power of Attorney was registered with the Office of the Public Guardian. The Attorney continued the practice of making gifts to himself. It should be pointed out that the original idea for the making of the gifts had come from Accountants who had been asked to advise on ways of mitigating Inheritance Tax. There was no suggestion that the Attorney had acted in any way dishonestly. Nonetheless, the Court of Appeal ordered that he repay the amount of the gifts that had been made after the registration of the Power of Attorney, as such gifts were beyond the powers of an Attorney. We should say that the decision of the Court of Appeal was split 2:1, making it clear that these sort of question are very difficult, even for the most Senior Judges in the Country.
In the second case an Attorney executed a transfer of property document and a mortgage deed on behalf of a property owner who was out of the country at the time. The transfer had the effect of putting the property into the joint names of the original owner ( the mother) and her son. As the property was transferred into joint names as “joint tenants”, when the mother died the son inherited the whole of the property by survivorship. During the court case it became apparent that the mother had never wanted the ownership of the property to be joint in the first place. While she might have been willing to allow her son’s name to appear on the title deeds so that the property could be used as a security for a mortgage to raise funds for the son, she had never intended to transfer real ownership of property into joint names. Effectively, therefore the Attorney had entered into the arrangement by mistake and the Court set aside the transfer, so that the property became part of the mother’s estate. Again the Court of Appeal Judges mentioned how difficult they had found the case to decide.
If you are appointed to act an Attorney you may well find that your job is not quite as straightforward as you might have imagined. If you should have any doubts about the way in which you should act, either generally or in relation to any particular matter, it is crucial that you obtain early specialist advice.
Incidentally, in the second case the Court reminded everyone that once you have given property away you have no right to demand its return, regardless of unforeseen consequences, or changes in circumstance. This is something that anyone considering making a significant gift, particularly of property, needs to bear in mind when making their decision