Power of Attorney – Can I borrow money from the donor?

This question is asked so many times I thought it was right to post the answer here and to give some further detail. This is accurate, as at January 2024 in the UK. When it was updated by me Contact Richard . As always if you are stuck on any of this then please get in touch.

Please read the information below really carefully.

I have provided a Frequently Asked Questions here.

FAQ: Power of Attorney and Borrowing Money

Q: Can I, as an attorney, borrow money from the donor? A: No, you cannot borrow money from the donor. It is not your money, and doing so could be breaking the law in the UK.

Q: What does ‘fiduciary responsibility’ mean? A: Fiduciary responsibility means that as an attorney, you are trusted to manage the donor’s money or assets for their benefit, not your own. You must act with honesty, integrity, and in good faith for the donor’s benefit.

Q: Can I use the donor’s money for my own benefits? A: No, you can only use the donor’s money for their benefit, not your own or anyone else’s. Any use of the power for personal benefit must be with the full knowledge and consent of the donor.

Q: What if the donor still has some decision-making capacity? A: If the donor can still make some decisions, it raises questions about the need for a power of attorney. However, it’s important to always act in the donor’s best interest and within the legal framework.

Q: Are there exceptions to these rules? A: While there may be exceptions, attorneys must always act in the donor’s best interest and follow the rules and regulations that apply. Always consult a professional if unsure.

Q: What about making gifts or loans with the donor’s money? A: You are not authorized to make gifts or loans with the donor’s money for personal reasons or to others. This includes attempts to reduce the estate value for estate planning purposes.

Q: What are my duties regarding the donor’s accounts and records? A: You must keep proper accounts and records of your activities, including receipts for substantial cash withdrawals or expenses. You must be able to prove that you managed the donor’s property prudently and honestly.

Q: What if I want to consider borrowing from the donor for their benefit? A: Borrowing from the donor, even if you believe it’s in their best interest, is not acceptable. Always act within the law and the donor’s best interests.

Q: Where can I get more information or help? A: For more guidance, contact the Public Guardian’s Office, or get in touch for professional advice. Remember, it’s important to ensure you’re acting legally and in the donor’s best interest.

Remember, this information is accurate as of January 2024 here in the UK. Always seek professional advice if you’re unsure about your duties and responsibilities as an attorney.

As an ‘attorney’ you have a ‘fiduciary responsibility‘ to the attorney. Now that word fiduciary is a complicated word. It’s definition is  a person to whom property or power is entrusted for the benefit of another.

Now, lets break that down for you (I’ll try not to sound patronising). ‘a person’ – the attorney, has power ‘given by the donor’ whom you are acting on behalf of (entrusted- or given trust) to act on the benefit or another ( in this case the donor). In very plain english, you have given control over money or assets in order to manage them on behalf of someone else, better than you would manage your own money.

It’s not complicated.

It could be that you are acting on behalf of the donor before they have completely lost capacity, and that puts you and me on really dodgy ground when answering the question, as the they (the donor) may be able to still make some decisions, which then leaves me asking why the power of attorney in the first place. But, OK, I have elderly parents and understand much of what goes on. But please get in touch if any of this is not clear.

With that in mind, let me answer the question.

Short answer on this is no, not sure why you thought it may be different. It’s not your money. Having spoken to a couple of people in recent weeks on this issue – it does seem that far too many attorneys are trying to tweak the rules that are in place – in order to fit their own aims – don’t. You are probably breaking the law here in the UK>

The long answer is below.

More – taken from http://johnmacaulay.com/borrowing-money-as-power-of-attorney/

It’s not a UK site but succinctly expresses it.

Borrowing Money as Power of Attorney

One of the questions which I am asked over the years is whether an attorney using the authority under a power of attorney can access money held for an incapable donor to be used for other purposes than to benefit the donor.

This situation arises most often when a child or children who are named as attorneys want to “borrow” money from the incapable person. The reason given is that Mum or Dad has
more than enough money to keep them for the rest of their days and they would loan the money without question. Besides, I am often told “I will pay it back if it were needed”

I often hear that taking into account the income from government and other sources they will never need any more income. Sometimes this type of transaction is joined in by and supported by all of the siblings.

Another justification given is that for estate planning reasons they wish to reduce the value of the estate on death and thereby pay less to the government. This is not within the authority of the attorney either since they are doing the same thing for another reason.

It is the attorney’s duty to use the power only for the benefit of the donor and not for the attorney’s own profit, benefit or advantage. The attorney can only use the power for his or her own benefit when it is done with the full knowledge and consent of the donor. I am not aware of any authority that detracts from this principle in circumstances where the benefit is conferred on family members.

An Attorney is a fiduciary whose powers and duties must be exercised and performed diligently, with honesty and integrity and in good faith, only for the incapable person’s benefit. An attorney who receives compensation for managing property must exercise the degree of care, diligence and skill that a person in the business of managing the property of others is required to exercise. I’ll explain the meaning below again, in case you didn’t get it the first time.

An attorney has an obligation to keep proper accounts. A trustee must keep a complete record of their activities and be in a position at all times to prove that they administered the trust prudently and honestly. They must have the accounts ready and give full information whenever required.
A trustee must make a proper accounting as a condition precedent to being awarded compensation. Without a proper accounting, the court is unable to assess the conduct of the fiduciary and to determine the compensation to which he or she is entitled.

In recent weeks I have had several conversations about parts of this article. As always there are always exceptions and most of you reading won’t fully understand the implications of these. With that in mind I am pleased to outline some other things that always need to be considered before you think about all of the reasons why you should be allowed to take the donors money and use it for your own purposes.

Exceptions to these rules. Whilst I don’t want to provide a list of things you can’t do, or outline those that you can, there are always exceptions. Attorneys must act in the best interest of the donor, must be aware of and act in accordance with the various rules and regulations that apply.

They must always accept and act in accordance with a fiduciary responsibility to the donor – that means treating any investments as though they are their own, but with a bit more care and documentation

They must take into account the Trustee Investment act, in particular as it relates to secured loans and mortgages which does not mean the full weight of the act applies – but it’s principles most certainly do.

Attorneys must also be very mindful of the 2014 Care Act – and note the various regulations around gifts/donations/transfers.

Do make contact if you have anything specific you want to ask, for the price of a couple hours employing a gardener, you will save yourself hours of searching.

Quick audio which covers thinks in different detail.

An attorney who fails to retain receipts supporting substantial cash withdrawals or expenses charged against the incapable person’s property has not adequately carried out their duties and will be held personally liable for the unsubstantiated withdrawals.]

If this article has been helpful, please consider buying me a coffee. This information could have cost you at least 30 minutes at the Solicitors office.

From the Public Guardians Office

To give or not to give? OPG launches new guidance on gifting

Again – no.

An in-depth explanation of what you can do. CA


More from the UK https://www.blakemorgan.co.uk/news-events/blog/making-gifts-under-power-attorney/

From Alzheimers.org.uk PoA’s are not authorised to take loans for themselves nor authorise loans for other people so far as I am aware. Others will be along with more knowledge than I but that’s my understanding from discussions with the OPG.

If you are really not sure and still want to consider the options of borrowing from the elderly parent – you are supposed to be acting in the best interests of – call the Public Guardians office – you’ll the same answer as above – it is not acceptable to borrow from a donor when you have power of attorney – not now not ever.

If you do want further guidance on this, you can Can I Borrow From The Donor contact me on this page

This post will have saved you money – please consider buying me a coffee.

Supporting Information – Challenge A Lasting Power of Attorney

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