Q&As

A donor of a lasting power of attorney (LPA) required care to allow them to continue to live in their own home. One of the donor's attorneys lent the donor money to pay for this care. The loan agreement between the donor and the attorney provided that the loan amount would be repaid when the house was sold with 2% compound interest. The donor no longer has capacity and it has been decided that the property should be sold and the donor go into a home. What action can be taken to ensure that the donor is not prejudiced by the terms of the loan?

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Produced in partnership with Emma Holland of Stewarts Law
Published on LexisPSL on 14/11/2019

The following Private Client Q&A Produced in partnership with Emma Holland of Stewarts Law provides comprehensive and up to date legal information covering:

  • A donor of a lasting power of attorney (LPA) required care to allow them to continue to live in their own home. One of the donor's attorneys lent the donor money to pay for this care. The loan agreement between the donor and the attorney provided that the loan amount would be repaid when the house was sold with 2% compound interest. The donor no longer has capacity and it has been decided that the property should be sold and the donor go into a home. What action can be taken to ensure that the donor is not prejudiced by the terms of the loan?

It is unclear if the donor has a lasting power of attorney (LPA) for property and affairs (P&A) or health and welfare (H&W) or both. Given that decisions have been made by the attorneys that the donor’s home should be sold (requiring a P&A LPA) and that they should go into a care home (requiring a H&W LPA), it is assumed that both exist and are registered. We assume that there is more than one attorney. If the attorneys’ authority to act is several (rather than joint), the lending attorney could opt out of decisions where they have a conflict of interests.

It is also assumed that:

  1. the donor had sufficient capacity to enter into the loan

  2. the LPAs do not contain specific instructions or preferences in respect of the timing for the donor’s home to be sold and/or for them to go into a care home (if so they should be considered by the attorneys)

  3. the attorney who made the loan wishes to remain an attorney (Disclaimer is not considered. For general guidance on disclaimer, see Practice Note: LPAs—revocation and disclaimer)

The Mental Capacity Act 2005 (MCA 2005) and the MCA 2005 Code of Practice (the Code) st

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