Individuals holding joint power of attorney for an elderly friend with dementia may have the ability to replace underperforming accountants and financial advisors, legal experts say. However, the process requires careful consideration of the donor's wishes and the individual's best interests.
Attorneys are not obligated to retain advisors simply because the donor initially chose them. Nevertheless, the donor's original preferences remain a significant factor when determining if a change is beneficial. According to the Mental Capacity Act 2005, attorneys must weigh several factors, including the donor's choice of advisor, any influencing beliefs or values, the views of those concerned with the donor's welfare, and any individuals the donor wished to be consulted.
If the donor can still express their views, attorneys should discuss concerns with them. The views of any co-attorney must also be considered. If attorneys are appointed jointly, all must agree on a decision. If appointed jointly and severally, each attorney can act independently but should still consider their co-attorneys' opinions.
Should the attorneys decide that a change is in the donor's best interests, they can proceed to appoint new advisors. It is advisable to provide formal written notice to the outgoing firms and establish written terms of engagement with the new ones. Requesting a handover of relevant documents, such as recent financial reports and tax filings, from the outgoing firms can ensure a smoother transition.
Attorneys have a duty to act in the donor's best interests, which includes assessing the suitability of current professional advisors. If dissatisfied with the service, the first step should be to raise concerns with the advisors and offer them an opportunity to rectify the issues.
Experts recommend seeking professionals experienced in working with attorneys or deputies, as well as vulnerable clients. Prospective advisors should be questioned about their experience in handling cases where someone is acting on another person's behalf and how they communicate and make decisions in such scenarios. For financial advisors, it is crucial to verify they are authorized and regulated by the Financial Conduct Authority.
Given the scenario involves a donor with dementia who owns rental properties, attorneys should look for an advisor who can focus on comprehensive financial planning, including cash flow management and future cost projections. This approach helps balance immediate needs, such as care costs, with long-term financial protection.
A competent advisor will also assess the rental portfolio's viability for someone who has lost mental capacity, ensure future care expenses are accounted for, and arrange finances and assets in a tax-efficient manner. Optimal outcomes are often achieved when financial planners, accountants, and solicitors collaborate on a coordinated long-term strategy that covers care funding, taxation, and estate planning.
Maintaining a detailed record of the decision-making process, including the reasons for changing advisors and selecting replacements, is crucial. This documentation can be invaluable if the decision is ever questioned by family members, the donor, or the Office of the Public Guardian.