A common document that many people put in place when completing their estate planning is a Power of Attorney. This allows another person to make financial and legal decisions on behalf of that person.
A person’s financial affairs can be quite intricate and the person who is acting as the Attorney can sometimes be required to make some complicated decisions.
Specifically, the Attorney can be put into a difficult position when the person they are acting for has significant expenses, but there is not enough money to pay for them. The Attorney does not have much of a choice other than to sell some of the person’s assets.
This is quite common when a person becomes elderly or their care needs increase.
In order to pay for care facilities, many people will have to sell some of their assets, such as property, to be able to afford the entry payments.
An Attorney generally also has the power to sell these assets on behalf of another person, but what if by doing so, they are effectively stripping a third-party of their benefit under that person’s Will?
S22 of the Power of Attorney Act 2003 deals with this very issue.
When a Power of Attorney, which has been drafted in accordance with this legislation, sells an asset that has been gifted to a third party under a Will, the Estate of that person will be obligated to account for this, by way of Ademption. This is a fancy way of saying that the Beneficiary, who was disadvantaged by the Attorney’s actions, will receive a cash payment of the net proceeds of sale (or whatever is left over) out of the Estate, before the rest of the estate is distributed.
So even if a person’s gift is sold by an Attorney, they will be compensated for the value of that asset, so far as possible.
If you have questions about Attorney’s duties or more generally Estates contact Everingham Solomons because Helping You is Our Business.
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