The Legal Risks of Managing a Loved One’s Money Without Proper Authority
As our loved ones get older, it can often feel like our changing day-to-day world is leaving them behind, and it becomes harder for them to live in an increasingly smart and automated society. It is our natural desire to help them with this, but a recent discussion on an online forum highlights an important discussion, which shows us that the consequences around doing this without the appropriate legal advice can be complicated for all involved.
Martin Lewis Money Expert’s recent weekly email shares with us a discussion on their public “Money Moral Dilemma” forum. On the post, a user asks “Should I keep the perks from my grandma’s bank account?” The user tells us that their grandma does not have a bank account and keeps all her money in cash. This has prompted the user to open an account in their own name, deposit their grandma’s cash into it, and carry out transactions for her including paying her bills. We also find out that the user is transferring their own money into the account, in order to make the minimum monthly pay in, and has been receiving interest and cashback bonuses from these transactions that they have been keeping.
The discussion this invites is not only one of morals, but also legality. The comments on the post largely discuss whether the user is in the right for keeping the cashback bonuses, and who that money truly belongs to. However, the larger aspect here is in fact the red flag of opening and operating bank accounts for another person without the authority to do so. Assisting our relatives with their property and financial affairs is a common occurrence, however this must be done with the correct legal authority.
In instances like the one in this post, grandma would benefit from setting up a Lasting Power of Attorney (LPA). A Lasting Power of Attorney is a legal document which appoints one or more people (the Attorneys) chosen by the person making the document (the Donor) to deal with their property and financial affairs. The Property and Finances LPA gives the Attorneys the power to make decisions about the donor’s money and property. They have the power to manage bank and building society accounts, pay bills, collect benefits and pension payments and sell the donors home should this become necessary.
If appointed as attorney for their grandma under a registered LPA, this forum user would be able to open a bank account for their grandma in her name and operate the account as her attorney, thereby keeping her money separately from theirs.
Operating under an LPA would protect this user against a number of risks that could come from handling loved one’s money without proper authority – including potential family disputes, at an already challenging time in life.
If you or one of your loved ones are in need of assistance with managing finances, and would benefit from setting up an LPA, BRM are here to help. For more advice on this, please contact Lynsey Oxley via email at lynsey.oxley@brmlaw.co.uk or by phone on 0114 6987467
