May 20, 2020
This blog was first published by Lawskills and has been replicated in part here, the original article is available on the following link
Are you meeting your safeguarding duties?
In December 2018, high street bank Santander was fined nearly £33m for failing to pass on the assets of deceased customers to their personal representatives and beneficiaries. In some cases, said the Financial Conduct Authority, the bank failed to realise that the deceased customer had multiple accounts. So if the beneficiaries and representatives were also unaware, the money was never released by the bank.
A separate case, re: MM, highlights the potential difficulties of a situation where two attorneys, appointed jointly and severally – one of whom is a solicitor. In theory, this is a sensible arrangement; there is both an attorney with a personal connection to the individual, and an attorney who understands the relevant legal responsibilities and constraints and can ensure that the attorneyship is correctly managed.
In the case of MM, however, financial abuse occurred, and that abuse would have been noticed sooner had the professional attorney sought access to financial statements, or had established a better understanding of the relationships of the donor and her family, only one of which had been appointed as attorney.
Talking about the law as it applied to this case, District Judge Batten referred to paragraph 7.59 of the Code of Practice to the MCA 2005, which states:
“Duty of care’ means applying a certain standard of care and skill – depending on whether the attorney is paid for their services or holds relevant professional qualifications…. If attorneys are being paid for their services, they should demonstrate a higher degree of care & skill. Attorneys who undertake their duties in the course of their professional work (such as solicitors….) must display professional competence and follow their profession’s rules and standards.”
The Judge ruled that the Property and Financial Affairs LPA should be wholly revoked and a panel Deputy appointed. The solicitor was responsible for their own costs incurred by the case, and jointly responsible for the Official Solicitor’s costs and any other reasonable costs arising.
The importance of safeguarding
Both these cases show a need for all attorneys to have clear, real-time oversight over the individuals’ financial matters, and the case of MM shows how important it is for professional attorneys to not only understand the law, but apply it strictly and in the individual’s interests. Attorneys cannot simply add the individual to a long list of clients and hope that everything goes smoothly. Attorneyships are often made and used in times of stress and can bring significant complications. It is the duty of a professional attorney to do everything they can to administer an estate wholly in the interests of an individual and to guide any other attorneys accordingly.
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It can be difficult for healthy clients to imagine being unable to make decisions for themselves. Even clients who are acting as attorneys for parents or are carers often think it won’t happen to me.
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We believe that cash flow planning is an essential part of private client work – for financial advisers, accountants and solicitors alike. Understanding its importance means we can give better advice and that in turn allows our clients to make the most of what they have.
There are many legitimate reasons why people may want to make large gifts: for example, inheritance tax planning, supporting family members or ‘balancing up’ previously unequal gifts to family. When planning gifts, it is important that individuals take advice and document objectives and the effect of the gift, which can help protect them from an accusation of ‘deliberate deprivation’ in the future. Cashflow planning can help in this instance
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