Attorneys and Investment Decisions
Attorneys acting under either an Enduring Power of Attorney (EPA) or Lasting Power of Attorney (LPA) may be required to make financial decisions, including investment decisions, but it is not always as simple as that. Usually, as long as the Power is unrestricted, attorneys can make all financial decisions that the donor themselves could make, but when it comes to engaging discretionary fund managers to manage an investment portfolio, their authority may be reduced.
The general position under both EPAs and LPAs is that an attorney cannot delegate powers beyond those which he has expressly been given. This means that an attorney cannot generally delegate his authority to act unless the power to delegate is expressly provided for in the Power of Attorney.
The Office of the Public Guardian has updated their guidance to confirm that, when creating a Financial Lasting Power of Attorney, donors should include specific wording to allow their attorneys to delegate investment management decisions to a discretionary investment manager, such as a bank or IFA. The OPG also suggests that without specific wording within an LPA, attorneys would not be able to use a discretionary management service and would have to make investment decisions themselves.
Clearly this guidance is causing difficulties for those attorneys who are already using an investment manager under an LPA that has been registered without the specific clause. Some are finding that such investment managers are now refusing to act and, whether they like it or not, attorneys are having to make financial investment decisions themselves. Where the attorney does not want to act in this way, and if the donor lacks capacity and is unable to make the change to the LPA themselves, the only way that attorneys are able to maintain, or engage, the services of discretionary investment managers is to make an application to the OPG, which is expensive and can take some time, and could lead to potentially missed investment opportunities.
Based on this, it is best advised that if you wish for your Attorneys to be able to use discretionary fund managers then you should update your existing power of attorney and draft a new Property and Financial Affairs LPA to include the appropriate wording. It also advisable that the wording be checked by the relevant financial institution before the LPA is registered to ensure that it is wording that will be accepted.
Although some institutions may validly agree to continue to act as discretionary fund managers without such wording, it is not guaranteed that they will do so. Therefore, it is best practice to include appropriate wording to avoid any uncertainty and to dispense with the need to make an application to the OPG for authorisation.
If you require ay further information or advice or wish to discuss making Lasting Powers of Attorney please contact a member of the Tax & Estate Planning department.