What is a “continuing power of attorney”?
- A continuing power of attorney is a legal document which an adult may create, while mentally able to do so, to give someone else the power to manage their property and financial affairs should they no longer have the capacity to do so for themselves. The scope for doing so is governed by the Adults with Incapacity (Scotland) Act 2000.
- Where someone grants a continuing power it will, in particular, give the attorney power to operate the granter’s bank accounts and often grants many other powers as well.
If the granter of a continuing power of attorney dies who deals with their estate?
- When the granter of a continuing of attorney dies the power of attorney terminates and the attorney may no longer act as such. Instead the deceased’s “executor” takes over.
- Their executor is the person who will investigate the assets and liabilities of the deceased’s estate, administer their estate and, after paying debts, any Inheritance Tax and the expenses of administration, transfer their estate to those entitled to it under their will or, if there is no will, to those entitled under the law of intestacy which prescribes who gets what where there is no will.
What is the link-up between the attorney and the executor?
- The person who has been acting as the deceased’s attorney during the deceased’s life will have a duty to account to the deceased’s executors for what they have done under the power of attorney. The Scottish Government Code of Practice for Attorneys Continuing and welfare attorneys: code of practice – gov.scot (www.gov.scot) says:
“If the power of attorney is terminated you should make sure that you [i.e. the attorney] keep the records of what you did while acting as attorney and be prepared to make these records available … in the event of the adult’s death, to his or her executor.”
- The attorney under the continuing power of attorney is often a different person from the executor under the will. But sometimes, the attorney and executor are the same. That can create difficulties.
Example of the difficulties where the attorney and the executor are one and the same person
- Suppose Mr Bloggs appoints his daughter Janet as his continuing attorney. And suppose Mr Bloggs makes a will appointing Janet as his only executor but leaving his estate equally between daughter Janet and his son John. And suppose Mr Bloggs then dies.
- Son John has a basis for concluding that the value of estate – in particular, say, Mr Bloggs’ bank accounts – is less than he was expecting. He alleges that Janet, while she was operating the continuing power of attorney, has misappropriated some of the money for herself.
In such circumstances what can John do?
- In general the view was that in such cases where the continuing attorney and the executor were one and the same person John as a beneficiary under the will could not do all that much. While Janet as continuing attorney had a duty to account to herself as executor for her actings as attorney she did not, as continuing attorney, have a duty to account to John as a beneficiary under the will in relation to those actings.
- That general view was reflected in the recent case of Currie v Currie’s Executor ([2022] CSOH 88) where the judge said:
“13… the attorneys are only bound to account for their [actings as attorneys] to the … executor… I acknowledge that … this raises the peculiarity that the … attorney can only be required to account for her intromissions to herself [as executor]. However, that is not a reason to abandon established legal principles. It remains that beneficiaries have no right or interest to determine the composition of the estate.”
- So, in our example where John alleged that Janet as continuing attorney had misappropriated money from their father’s bank accounts it would hardly reassure him to know that Janet as attorney was only required to account to herself as executor about that and not required to account to him as a beneficiary.
- The case was however appealed and, on appeal ([2022] CSIH 58), the outcome was different.
The decision on appeal – as applied to Janet and John – and what John could do now
Our fictitious Janet and John case is now reconsidered in the light of the decision of the appeal court.
- On appeal the court confirmed that it would not be competent for John as a beneficiary on their father’s estate to raise an action against Janet, in her capacity as their father’s attorney, seeking payment of a share of the sum allegedly due to their father’s executry estate as a result of Janet’s misappropriating funds from their father’s bank accounts.
- But Janet as executor was nevertheless accountable to John as a beneficiary for the proper performance of her “fiduciary” duty as executor to ingather their father’s estate in order to pay his debts and distribute the balance between them as beneficiaries under the will.
- If, as John alleged, Janet as continuing attorney had misappropriated funds from their father’s bank accounts in his lifetime she would have been due to repay them to her father. Now that he was dead she would be due to repay such funds as a debt due to his estate.
- So, although John could not call on Janet to account to him for her actings as their father’s attorney he could call on Janet as their father’s executor to account to him as beneficiary of the estate for a debt due to the estate which she as executor had failed to ingather.
Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact Lauren Booth: email Lauren@mitchells-roberton.co.uk