Power struggle – dealing with disputes between attorneys acting under a financial lasting power of attorney

A financial Lasting Power of Attorney (LPA) allows an individual (known as ‘the donor’) to appoint one or more people (called “attorneys”) to manage their finances in the event that they lose the mental capacity required to make certain financial decisions.

Although, financial LPAs can be useful, they are not without risk.  Disputes can often occur about what constitutes acting in the donor’s best interests or how the attorney is dealing with the donor’s finances.

This article is the second in a series of articles which explore LPA disputes and it focuses on disputes between attorneys and how to potentially resolve these and avoid problems from occurring.

Attorney’s legal obligations

Attorneys must act in the best interests of the donor and adhere to the principles set out in the Mental Capacity Act 2005, which govern LPAs in England and Wales.  The attorney’s role may include:

• ensuring that the donor’s financial needs are met;
• managing bank accounts and investments, making payments, and other financial matters;
• maintaining accurate records of income and expenditure;
• keeping the donor’s money separate from their own; and
• making financial decisions that consider the donor’s preferences and values.

Reducing risk

One way of trying to reduce the risk of a dispute between attorneys occurring is to consider  the following key points when making an LPA:

• how many attorneys to appoint;
• who to select as the attorney(s);
• whether the attorneys will have to make joint decisions or whether they can make decisions independently of each other;
• whether a conflict of interests might arise between the attorney’s obligations and their own interests;
• whether both attorneys will have the ability and opportunity contribute to decision making; and
• whether the attorneys (if more than one) will work together effectively?

These points are considered further below.

How many attorneys?

Having one attorney can simplify decision making, because they  do not have to  consult a co-attorney.

However, there is a risk that a sole attorney might either make poor decisions, mismanage funds, or abuse the LPA, because they are acting on their own. For example, in 2024 David Eggleton, was jailed for five years and six months for  abusing a financial LPA granted to him his 93 year old aunt, Lilian Eggleton.  The theft of around £600,000 was discovered after there were no funds remaining to pay Ms Eggleton’s care home fees.

Mr Eggleton claimed his aunt had loaned and gifted him the money and he relied on an alleged loan agreement (which he later admitted was created fraudulently). He apparently used the stolen funds to pay off his mortgage, buy cars, pay for holidays and for garden makeover, purchase Bitcoin mining device and to buy Apple products.

While appointing more than one attorney can provide reassurance, it can also lead to disagreements.

Who to choose?

It is vital to choose attorneys who are likely to be able to work together effectively and who will be able to make financial decisions.

Donors can choose a mixture of a lay person e.g. a relative or friend and a professional attorney e.g. an accountant or solicitor to act together as attorneys.  Alternatively, they may choose only professionals, relatives or friends to act.

Personal relationships between attorneys can often impact on their ability to work together, and past grievances, or clashes of personalities can prompt disputes and make it difficult for attorneys to focus on acting in the donor’s best interests.

One area where problems can occur is where the donor focuses on parity when selecting their attorneys, rather than who is the best person for the job.  Yet, choosing attorneys simply to provide ‘fairness’ within a family can be a recipe for disaster. For example, if the donor has three children who do not get on with each other and they want to appoint all of them as their attorneys, problems are likely to occur.

Attorneys can also have different approaches to managing finances. For example, one might adopt a conservative approach, favouring low risk investments, while another may want to adopt a different investment strategy. Such differences can lead to disagreements about how to best manage the donor’s assets and this can cause delays and/or financial loss.

Joint or several?

Attorneys who are appointed to act jointly must agree on all decisions. This can be beneficial because it ensures that no single attorney can make decisions without their co-attorneys’ input, but if the attorneys cannot agree about financial decisions, this type of arrangement can be problematic.

If attorneys are appointed to act severally, each attorney can act independently of the others. While this may speed up decision-making and provide flexibility, it can also lead to disputes if the attorneys either have different opinions, or their actions conflict, so one attorney’s actions may contradicts or undermine the others. This can result in confusion, mistrust and potentially also cause financially harm to the donor.

It is therefore important to consider which option is likely to be most effective in each individual case.

Conflict of interests

One of the main causes of disputes involving financial LPAs is conflicts of interests. If an attorney  is close relatives/friend of the donor, their own financial interests may sometimes conflict with their legal obligations. One attorney might want to protect the donor’s finances, while another may have a vested interest in how the donor’s money is spent (and be reluctant to incur expenditure).  For example, one attorney may agree to incur care home fees while the other may be concerned that the fees will erode their future inheritance (if they benefit under the donor’s will).

An attorney who acts to benefit their own financial position, to the donor’s detriment, would not be fulfilling their legal obligations.

Can the attorneys communicate effectively?

Effective communication is crucial when multiple attorneys are appointed, to avoid duplicated efforts, delays and misunderstandings. The example below explains how poor communication can affect a donor:

Example

A grants a financial LPA to her two children, B and C which requires them to make decisions jointly.  B and C live in different parts of the UK, they rarely meet or speak to each other, and B insists on only communicating with C by email.

A needs a hip operation, is in pain and has been told there is a long NHS waiting list.  A has substantial savings which could be used to pay for private treatment.  C confirms with a local, private hospital that they have availability to do the operation within weeks,  provided that payment is made in full to confirm the appointment.

C repeatedly telephones and texts B to try to obtain B’s approval of the payment, but C does not know that B has blocked C’s number.  C sends emails to B marked ‘urgent’  but, by the time B checks his emails, the hospital appointment has been given to someone else and A misses the opportunity to have  the treatment.

It is therefore important that attorneys establish an effective method of communication in relation to both routine and urgent decisions and that they also communicate  with each other about periods when they may be uncontactable, e.g. if they go on holiday.

Allocation of work

An attorney might feel that their contribution or authority is not recognised by their co-attorney.  This can lead to resentment and conflict, particularly if one attorney feels they are taking on an unfair share of the attorneys’ responsibilities, or that their decisions or views are constantly being overruled by their co-attorney.

Resolving disputes between attorneys

If a dispute occurs, it is important that it is resolved as soon as possible to both protect the donor, and also to ensure that the attorneys are complying with their legal obligations.

Proactively addressing potential sources of conflict and implementing strategies to try resolve disputes can help with the effective management of the donor’s finances.  Below are some points to consider:

1. LPA

A clear and detailed LPA can help to clarify the donor’s wishes if a dispute occurs. It should therefore outline the powers granted to each attorney and the donor should also consider the above points.

2. Reconnecting

As mentioned above, establishing an effective method of communication can help to avoid disputes or problems. When things go wrong, re-establishing communication is just as  important and it can help to rebuild and maintain trust. For example, regular scheduled meetings can help ensure  to avoid misunderstandings and keep all attorneys updated.

3. Mediation and ADR

Alternative Dispute Resolution (ADR), such as mediation, can help to resolve disputes between attorneys without resorting to litigation, and it can also reduce costs.  ADR can allow attorneys  to reach a mutually acceptable solution, while  also preserving personal or working  relationships between them.

4. Legal advice

In cases where disputes cannot be resolved through improved communication or ADR, seeking specialist independent legal advice might be necessary, so that the attorneys can understand their rights, options and legal obligations.  Instructing solicitors may also allow attorneys to keep a communication channel open without the need to speak with each other directly.  This can provide ‘breathing space’ or allow the attorneys an opportunity to consider their positions and how to progress matters.

Appointing a neutral expert

Appointing a neutral third party, such as a professional advisor, can also help to resolve disagreements by obtaining unbiased advice.  For example, instructing a professional valuer if the attorneys do not agree on the  value of an item.   This can be particularly useful if personal conflicts are the root cause of the dispute.

Litigation

In some cases, disputes may require litigation to resolve them.  The Court of Protection is a specialist court which deals with disputes involving LPA’s and attorneys.  Each attorney is given an opportunity to present their position and the court can then determine what actions should be taken in the donor’s bests interests.

Litigation is usually a last resort as it incurs time and costs. However, making an application to the Court of Protection can break a impasse between attorneys, protect the donor and also provide guidance for the attorneys to move forward.

If an attorney is contemplating litigation they should obtain specialist advice as there is risk involved and there are also specific rules in relation to recovering costs.

Conclusion

Disputes between attorneys acting under a financial LPA can be complex, worrying and emotionally draining for all involved.  By understanding the potential causes of such disputes it is possible to take steps to try prevent conflicts from occurring, protect the donor’s interests and maintain family relationships.

However, where the relationship between attorneys deteriorates, one attorney has concerns about the other, or the donor is concerned about an attorney’s conduct, it  also important to be aware of the options which may be available for resolving disputes, including legal intervention. If in doubt, specialist legal advice can provide an attorney with reassurance and support, and explain the options available.

Our Private Wealth Disputes team advise and represent donors and attorneys in LPA disputes and Court of Protection applications.