My 91-year-old mother is now living with my sister after a fall and being in hospital.
She is no longer able to live on her own, and we promised mum we would do all we could to keep her from going into care.
My sister lives two hours away from me, two miles from mum’s bungalow, and we both have power of attorney for mum as she has early onset dementia.
We have decided to sell mum’s bungalow, but my sister wants to split the proceeds of the sale between myself and her, about £100,000 each.
Can we use power of attorney to sell our mum’s bungalow and split the cash?
She will use that and the sale of her own home to buy something for her, her husband and mum to be able to live nearer to me, and other family, so we are able to help and give them a break from time to time.
The question is, can we legally have this money?
My sister also wants to use my share to buy the second house first, then give me my share when her house sells. But something doesn’t sit right with me. Could you give me any advice please?
Tanya Jefferies, of This is Money, replies: I am really sorry to hear your mother has been so ill.
You and your sister sound like you are doing your best to look after her, to follow her wish not to move to a care home, and to cope with the practical issues that all this entails, now and in the future if her condition gets worse.
All that said, you have written to us asking about the legality of your sister’s plan for your mother’s care, and whether it adheres to your duties as joint holders of power of attorney over her affairs.
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The overriding principle attorneys must hold to when making decisions for someone else is that every single thing they do must be in that person’s best interests.
You must also remember that your mother’s money and property remain her money and property. That is really important, even if you and your sister will eventually be beneficiaries under her will, which seems likely though you didn’t mention it.
It is understandable I think that your sister, while caregiving on the spot during a stressful time and also seeking to devise a viable longer-term care plan, may have sincerely convinced herself that your mother’s best interests coincide with her own personal interests, and those of your wider family including you.
But you are right to call a halt to find out if there are legal pitfalls before any important financial decisions are made that are difficult and expensive to unwind, such as selling and purchasing property.
These do exist, and will persist into the future, even if your mother still has the ability – the mental ‘capacity’, in legal jargon – at present to endorse your sister’s plan.
We asked lawyers from the firm Clarke Willmott, who are specialists in areas relevant to your question, to outline your duties under power of attorney and the potential problems and penalties if you let your sister go ahead.
These include being required to repay the money raised from the property sale to your mum – even if you or your sister have already spent it – and having your power of attorney revoked and an independent outsider appointed to look after her affairs instead of you.
However, the lawyers who respond to you below could only address your family’s situation in broad terms, based on the information given in your question.
Getting your mum’s GP to assess her mental capacity at this stage sounds very sensible.
You and your sister might also want to consult a lawyer yourselves for detailed, personal guidance about the best way to care for your mother and meet your responsibilities as her attorneys.
Bonita Walters, partner and head of contentious trusts and probate, and Anne Minihane, partner in the private client team at law firm Clarke Willmott, reply: You do not mention what type of power of attorney your mother has granted to you and your sister.
Lasting power of attorney helps families keep control if illness or accident strikes
Why you need this and how to set it up. Read more here.
What happens if you or a family member fall ill without an LPA in place? Read more here.
It may be an Enduring Power of Attorney if it was made before 1 October 2007 or a Lasting Power of Attorney if made after that date.
For you to have power over your mother’s finances the LPA must be a finance and property LPA and it must be registered with the Office of the Public Guardian, which is the body that oversees EPAs and LPAs alongside the Court of Protection.
If your mother is beginning to lose the ability to deal with her financial affairs, and you have an EPA, it must also be registered with the OPG.
Whichever power of attorney you have, you are both under an overriding duty to act in your mother’s best interests, and you should support her to have an input into decisions.
When making decisions you should consider your mother’s likely beliefs, wishes and feelings.
You should also avoid putting yourself in a situation where your duties as attorney conflict with your personal interests. These obligations are imposed on you by the Mental Capacity Act 2005 and its Code of Practice.
Where do you stand legally if you agree to your sister’s plan?
You say your mother’s dementia is in its early stages, so she may have the capacity to decide where she wants to live and how this would be funded.
For your mother to have the necessary capacity, the Mental Capacity Act states that your mother must understand the information relevant to the decision, retain that information, use that information when making her decision and be able to communicate her decision.
Assessing mental capacity should be done by an expert so you should involve your mother’s GP in the first instance.
If your mother lacks capacity, you should not implement the plan, because attorneys are only permitted to make small gifts, such as birthday or Christmas gifts.
Splitting the proceeds of the sale of your mother’s bungalow would be deemed a large gift to the two of you which is not permitted.
There is also a potential conflict of interest between your mother’s best interests and your sister’s personal interests.
Ask an expert: Bonita Walters, left, is partner and head of contentious trusts and probate and Anne Minihane, right, is partner in the private client team at law firm Clarke Willmott
If your mother has capacity and agrees to the plan, there is a potential problem with dividing the house proceeds between the two of you.
Your mother’s dementia will probably worsen over time and a care home may be the only setting in which her needs can be met.
Unless she has other resources to pay her care fees, her local authority (which would generally be responsible for her care fees funding) may regard the gift to the two of you as deprivation of assets to avoid paying care fees.
They will treat your mother as still owning the house proceeds and you would have to repay the money.
If you have spent the money, or it has been invested in an illiquid asset, this is likely to put you both in a difficult position.
You could apply to the Court of Protection for authority to make the gifts but, unless your mother has other financial resources to pay possible future care fees, it is unlikely that the gifts will be authorised.
What else should you consider?
Your sister’s plan to hand over your share of the money later: This is risky for you because of potential difficulties in enforcing the agreement if anything were to go wrong or if something untoward happened to your sister before she paid over the money.
Implications for the beneficiaries of your mother’s will: Your mother may have benefited people other than you and your sister in her will, for example, grandchildren.
Giving away a large sum may mean that there is insufficient money in her estate on her death to pay the legacies. If your mother has capacity, this is something she needs to consider.
Penalties you and your sister might face: Aside from potential difficulties with the local authority, if your mother does not have capacity the gifts will be void and you could be required to repay the money by the court.
Your power of attorney could be revoked (cancelled) by the court and your mother’s affairs would be dealt with by a Court of Protection-appointed deputy.
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