Family disputes over assets ‘on the rise’

Lawyers urge seniors to ‘think very carefully’ when choosing whom to leave in control of their affairs.

The call comes after a rise in the number of cases where families have ended up embroiled in complex legal tangles.

And it follows a recent case in which Terrance Masters ended up taking his niece and nephew to court to regain control of his mother’s affairs after she revoked the power of attorney she had originally given to her son while she did not have the mental capacity to understand what she was doing.

Michael Mello QC, a private client and trusts lawyer for Appleby’s, told the Bermuda Sun: “The Donor of a Power should always appoint a person he or she can fully trust.

“However, there may be situations where it will cause offense if a person to whom the donor is related is not appointed as the donee, or one of them.

“For example, if there are children living in Bermuda, it may cause offense to them if one or more of them are not appointed as the donees, and the parent appoints the child who is not living in Bermuda, or a non- related person.

“One way around this is for the parent to appoint the children acting as joint donees so that they can act as a check and balance on each other.”

Mr Mello added: “When I first started practicing in Bermuda we seldom had disputes in this area.

“But it has become more and more prevalent because the population is getting older.

“In many cases the body is surviving longer but the mind is not, and this opens the door for more problems.”

Mr Masters’ lawyer, Keren Lomas, speaking in general terms, told the Bermuda Sun: “The public should be aware that the use of Powers of Attorney can be a very valuable estate planning tool and are commonly used for this purpose.

“The donor of the power gives to another person the power to conduct the donor’s business in the donor’s name.

“There are however a number of different ways of drafting a Power of Attorney.

“The most helpful will be a Power of Attorney that only comes into effect when the donor is physically and/or mentally infirm to such a degree as to be unable to conduct his or her affairs and the deed will require the certificate of a medically competent person to attest to the infirmity.

“Every Power of Attorney lends itself to abuse and financial exploitation of the donor unless the person to whom the power is given is 100 per cent trustworthy.

“The fact of the matter is that when an elderly person seems to be getting near the end of his or her life, there is always the temptation to take advantage of that position of trust and use the donor’s money for purposes other than in accordance with the deed; the Power of Attorney will require the donor’s assets to be used for the donor’s maintenance and benefit.

“A psychiatric assessment is the only sure way of testing a senior’s mental competency to understand the nature of the deed he is signing when giving away his assets or giving another person control over his assets.

“The certificate of a GP is not sufficient; a psychologist can carry out the cognitive functioning tests but I believe the psychiatrist is the only medically qualified person to diagnose mental competency or incompetency.

“Members of our profession will hear of stories like this one reported and hopefully will be mindful in future of the special role lawyers can play in the protection of seniors.”

While Mr Masters told the Sun: “Seniors need to be realistic about the people they want in charge of their affairs.

“If the worse comes to the worse it can be remedied but it is a long, hard and expensive road.

“You have to be in it for the right reasons.

“There are not enough checks and balances in the system at the moment.

“There needs to be more due diligence in this area because cases like this will become more common in the coming years.”