We look at a recent case on the mismanagement of an elderly relative’s finances and the legal duties imposed by the court.
People often assume that they can manage a loved one’s finances without formal authority or the imposition of a legal duty. However, the recent case of Keith Roberts and Ors v Paul Roberts has demonstrated otherwise.
A case involving mismanagement of an elderly relative’s finances
The case concerned an elderly widow whose four children had been assisting with her care. However, when she required all-round care she moved in with her son, Paul.
The children agreed that it would be appropriate to sell the family home. Additionally, the children agreed to close their mother’s building society account and share the proceeds. £10,000 was paid to each of the three brothers but only £3,000 to the sister. None of the children held a Lasting Power of Attorney, nor had they been appointed by the court as Deputies.
After the mother had passed away from senile dementia and Alzheimer’s disease the family found out that Paul had transferred nearly the whole of the proceeds of the sale of the family home into his own bank account. He said it was a gift, but his siblings disputed this and issued court proceedings against him.
When the matter came to Court, the Judge said that the mother had lacked the requisite mental capacity to make such a substantial gift to Paul. The Judge emphasised that where a gift disposes of someone’s only asset of value (in this case the property) then the donor must have the same degree of understanding as though they were making the gift by Will.
It was also argued that Paul owed a ‘fiduciary duty’ to account for his dealings. Paul had taken over the management of his mother’s finances by collecting her pensions and dealing with her other finances.
The Judge agreed that the circumstances did indeed impose a fiduciary duty upon Paul. The Judge noted that Paul was dealing with his mother’s financial affairs as though he was acting under a Lasting Power of Attorney, when a fiduciary duty does exist.
Avoiding mismanagement of an elderly relative’s finances.
Where you assist with the management of someone’s finances without formal legal authority (such as a Lasting Power of Attorney or Deputyship) then this recent case confirms that a fiduciary duty will be imposed. When such a duty exists, you should ensure that you keep detailed records and be ready to justify any transactions which take place. You can also look at steps to have your role legally formalised.
How we can help
If you are required to manage an elderly relative’s finances and wish to avoid getting into legal difficulty then we are here to help. We can guide you on what the law expects so that you are not accused of financial mismanagement. We can also look at options to formalise your role, possibly by way of a Lasting Power of Attorney or having you appointed as a Deputy.
Our contentious probate lawyers are also able to assist family members who have lost out due to someone mismanaging an elderly relative’s finances or committing financial abuse.
Call us on 0333 888 0404 for a free case assessment or send an email with brief details to us at [email protected]