Making Investments as an Attorney

Wednesday 21 August 2019

The number of people taking out Lasting Powers of Attorney (LPAs) is on the increase, and there is no doubt that appointing Attorneys to deal with your finances is invaluable if you lose capacity to manage your affairs.

However, if you have been appointed as an Attorney it can be a daunting prospect having to manage someone else’s finances.

The general rule of thumb is to approach their finances with the same level of care that you would manage your own, and with minimum risk.

But how do you balance this against ensuring a good return that will help to protect and provide for that person’s future needs?

The Government have recently updated their guidance about making investments on behalf of someone else as their Attorney.

The five key points to bear in mind are:

1. You must not make investments according to your own personal preference but must assist the person in making their own decisions (if they still have capacity), and balance what you believe to be in their best interest (if they’ve lost capacity) with what you know to be the person’s preferences and beliefs.
2. Investments can range from standard savings accounts, to buying property (commercial or residential buildings), gold, antiques or artwork. Essentially anything that is likely to increase in value over time which can either provide an income or make a profit on sale.

Buying shares can be lucrative, but can also be risky for the amateur investor, and you must weigh up the level of risk involved.

3. As an Attorney you have the legal right to choose any of the above investments or a combination.

Provided the LPA is worded correctly you can also appoint a professional financial adviser to manage investments on behalf of the person involved.

In any event, it’s advisable to engage a financial adviser if you feel that you don’t have the expertise to make informed decisions.

4. As an Attorney any investments that you make on behalf of the individual must be in their name, not yours.

Under the LPA you will still have the right to manage their accounts for them, but you must keep their money separate from your own and you must not profit in any way from the person you are assisting.

5. Keep detailed records of all the financial transactions that you make on their behalf.

If you are appointed as an Attorney it’s a good idea to start having conversations with them whilst they still have mental capacity, to find out what sort of investments they already have in place and what their preferences would be in the future.

Some discussion points include:

• Do they lean towards more ethical investing?
• Are they relatively conservative in their current approach?
• Do they have any preferred financial providers or a financial adviser already in place?

Once you start acting for someone who has lost mental capacity you need to weigh up what their future needs are going to be. For example:

• Will they need residential care or to be cared for in their own home?
• How can you make sure that their assets are maximised?
• Do they own their house?
• Is it in their best interest to remain in it or to sell it and invest the proceeds elsewhere?

When making an LPA

It’s worth bearing in mind that you can appoint a professional Attorney such as a solicitor or accountant.

This can work extremely well alongside a family member, or trusted friend, as you will then have someone who knows you on a personal level as well as someone who can be objective and offer professional assistance (especially when it comes to investing).

 

If you are an Attorney and need assistance with carrying out your duties, or are thinking of making a Lasting Power of Attorney, please contact a member of our Wills & Probate team for a no obligation discussion.

Alternatively you can read the ‘Investing for someone as their attorney or deputy’ guidance in full here.