LPA and buying assets

[garfieldthecat]

Hi,

This is my first post but having spent time looking at quite a few I realise you are a friendly bunch with loads of answers so here goes!
Mum was recently diagnosed with vascular dementia and is currently occupying a transition bed at a local residential home while her care needs are assessed. Both my brother and I are looking at obtaining Power of Attorney, assuming Mum's consultant says she is fit to understand the process. If not we will be going down the COP route.
The thing is, my brother is interested in buying Mum's house, which is going to have to be sold to pay her fees. While I have no problem with him doing so, would it be seen as a conflict of interests if he wants to be granted LPA and then buy Mum's largest asset?
Any comments/advice welcome, thanks.

 

[alfjess]

Hi
I am no expert, so don't take this as gospel, but if you have your Mum's house valued and your brother pays the market value for the house, I don't see a problem.

I think you would probably be doing SS a favour, because there would be more fluid assets to pay for her care.

As for COP, my understanding is as long as you are doing everything and keeping accounts in Mum's best interests, you should be alright.

But as I say, I am no expert.
Could you phone/write to COP and ask their advice?

Take care
Alfjess

 

[jenniferpa]

I "think" what you do is get a trustee appointed to oversee this one aspect to ensure there isn't a conflict of interest.

http://forum.alzheimers.org.uk/showthread.php?t=20089&highlight=trustee+property+sale

Bear in mind that Bruce (in the above thread) was operating with an EPA as it was then - they are now LPAs and the rules may be different. I do think, though, if you obtain two or three valuations and then average them out, you should be quite safe.

P.S. And welcome to Talking Point - you're correct: we are a friendly bunch

 

[Nebiroth]

I don't see that there would be a problem from the point of view of care fees, so long as your brother paid full market values for the property. If the house is to be sold to pay for care fees anyway, he is simply doing what would be done in due course. There would certainly be a problem if he wanted to buy the property for substantially less than it's worth, or some nominal fee; that would be seen as a deliberate attempt to evade using it to pay the fees - what is called deprivation of assets.

However, from the LPA view it might be perceived that he is using his position to benefit himself (ie, he is getting preferential treatment rather than placing the house on the open market).

I can only suggest that you get legal advice or seek clarification from the Court of Protection. They might suggest some sort of third party trustee.

Property tends to be a sensitive issue because it is usually someone's home, it is a very valuable asset, and there are all the entanglements of things like care home fees, inheritance tax and so on.

 

[Sandy]

Hi garfieldthecat,

I think you would actually need to consult the Court of Protection (COP) on this one to be sure.

The specific advice might depend on whether or not you are able to be attorney's under an LPA or have to become deputies under the COP. From my limited understanding, and I have no legal training, the standards of oversight/accountability are much tighter for deputies than attorneys.

For example, this guidance document for deputies says:

What if I have a conflict of interest?

You should not make major decisions where there is a conflict between your personal interests and the interests of the person who lacks capacity. For example if you or a member of your family wishes to purchase a property belonging to the person who lacks capacity, you will need a Court decision about whether the sale should go ahead.

If you are unsure about what to do you should follow best interests principles, seek legal advice and/or contact the Office of the Public Guardian who can direct you to other sources of information.

from http://www.publicguardian.gov.uk/docs/OPG510-0409-1.pdf

It might also be worth looking at this document from the Office of the Public Guardian's website which describes itself as:

This guide outlines the legal and other requirements in dealing with the sale and purchase of land for a person who lacks capacity in light of the implementation of the Mental Capacity Act 2005 from 1st October 2007.

It appears to have been written as professional advice for lawyers, but it does give some idea of the standards expected, if a transaction was to be approved:

http://www.publicguardian.gov.uk/docs/wrigleys-solicitors-guide-to-cop-property-procedures-1209.pdf

Take care,

 

[susiesue]

Hi Garfield the cat

I have had a similar problem as I needed to buy my husband's share of the flats we jointly own (our pension) in order to release funds for his care.

When the EPA finally was registered and with it came a booklet which states that if you are the Attorney on the EPA you have to apply to the COP for their permission to purchase any property from the Donor. This can take 15-20 weeks and costs an additional £400. Hopefully I am just coming to the end of this process and because I have nagged constantly it hasn't taken so long.

If your brother is an Attorney on your mother's Power of Attorney I think you will find he cannot purchase property from her (the Donor) without the COP permission.

We had an EPA although I don't imagine it would be any different with an LPA.

Hope this helps.

 

[garfieldthecat]

Many thanks to all those who have responded so far. It looks like such a sale is probably going to be okay but he will need to get the all clear from COP. I will let you know what happens!

 

[Nebiroth]

Yes - the guidelines clear state that the Court must give it's approval if the Attorneys or other members of the family wish to purchase property owned by the Donor.

I don't think that they are likely to deny permission, so long as your brother will be paying full market value for the property - also your mum will be moving into residential care which will be funded by selling the house anyway.

What they'd be looking to prevent is dodgy schemes whereby family members get their hands on property without paying it's full value or vulnerable people being deprived of a decent home to live in.

The Court wheels tend to grind slow, so be prepared for a wait...and a fee.

 

[MJW]

Cop

Hate to put a spanner in the works, but the COP documentation states very clearly in several places that they "cannot offer legal advice". In other words, you probably need to consult a solicitor.

 

[Nebiroth]

It's not legal advice: it is asking the Court for approval to do this. The Court's guidelines already make it clear that you have to ask for their approval in such circumstances.

Even if it wasn't, it isn't really asking for legal advice as such if you just ask "do I need to get Court approval before doing xyz"

 

[susiesue]

I agree, it is not legal advice you are asking for, you have to ask for their 'permission', which is different.