A vintage problem?

All too often, elderly clients are seen as only requiring simple, routine advice. Every elderly client should have a will and powers of attorney, and have done everything possible to mitigate their inheritance tax liability. However, this minimum requirement masks the unique issues that must be addressed if elderly clients are to be properly advised and potential claims avoided. As a result, there are key questions that every solicitor advising an elderly client must ask themselves.

Does my client have capacity?

In the majority of cases, whether or not an elderly client has capacity to give instructions to make a will or grant a power of attorney will be obvious. However, certain degenerative conditions cause a gradual decline in mental capacity, with the client having good and bad days. It is not the case that any decline in mental capacity will result in a lack of capacity; a lucid interval can provide a sufficient opportunity to provide valid instructions. Determining whether a client can provide instructions can therefore be very difficult for solicitors, who must have close regard to the specific tests for capacity relating to the particular piece of work being instructed.

Testamentary capacity has generated volumes of case law and comment over the years. However, the test remains as set out 140 years ago in Banks v Goodfellow (1870) LR 5 QB 549:

“It is essential… that a testator shall understand the nature of his act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect, and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties, that no insane delusion shall influence his will in disposing his property and bring about a disposal of it which, if the mind had been sound, would not have been made.”

Evidencing capacity

Solicitors taking instructions for a will must keep detailed and accurate attendance notes of every meeting at which instructions are given. Such notes will be essential in the event of any challenge, and particularly for a testator who gives instructions for a will while capable but whose capacity declines before execution. In those circumstances, case law has shown that it is necessary only that a testator is capable of understanding that he is signing the will for which he had previously given instructions.

If there is any doubt as to whether an elderly client has testamentary capacity, solicitors should adhere to “the golden rule” of good practice laid down in Kenward v Adams, The Times, 29 November 1975 to minimise the chances of any challenge by aggrieved parties: “the making of a will by such a testator ought to be witnessed or approved by a medical practitioner who satisfies himself of the capacity and understanding of the testator and records and preserves his examination and findings”.

Powers of attorney

There is a specific test for capacity to grant powers of attorney. A detailed understanding of the document is not required and it is generally sufficient that the granter is able to choose attorneys and fully understands the implications of granting the power of attorney.

If signing the statutory certificate, the solicitor must be entirely satisfied that the test is met and would be advised to contact the Office of the Public Guardian in advance of the client’s execution to confirm the requirements. Otherwise, a medical practitioner should be asked to execute the certificate. In this case, detailed signing instructions must be provided to ensure that both the medical practitioner, generally the client’s GP, and the client fully understand how the documentation should be executed. This is necessary if delays caused by a need to re-execute are to be avoided.

General advice

When a solicitor is providing more general advice to an elderly client and has any doubt as to that client’s capacity, the solicitor should consider contacting the client’s GP or specialist consultant to ask for a written capacity assessment. Only once this has been received should advice be provided.

Sufficient understanding?

Once capacity has been established, it will be necessary for the solicitor to ensure that the client has a sufficient understanding of the matters being discussed and the documentation being provided. Solicitors can be guilty of providing standardised explanatory covering letters for documentation such as wills and powers of attorney which, although carefully drafted,

may not adequately explain the documentation for some clients. Time must be taken in face-to-face meetings to ensure understanding, and follow-up correspondence should reflect those discussions.

Equally, rather than simply issuing documentation for approval or execution, it is frequently advisable to consider the documentation in person with the client to allow all questions to be answered. Full and accurate meeting notes must again be kept to act as evidence in the event of a future challenge.

A need for speed?

A substantial number of claims against solicitors result from a client dying before documentation has been completed, in particular before wills have been signed. Not only must documentation be issued quickly for signature but the client must also be regularly reminded to sign, and if applicable, return the completed documentation. What have become known as “the disappointed beneficiary” cases bring this issue into stark focus and present a real risk for solicitors.

In the well known case of White v Jones [1995] 2 AC 207, the House of Lords held that where a client had given will instructions to a solicitor, and where, as a result of the solicitor’s negligence, an intended legatee under the will was reasonably foreseeably deprived of a legacy, the solicitor was liable to the intended legatee for the loss of the legacy. In this case, the testator wrote to his solicitors instructing them to prepare a new will and then died two months later, by which time no new will had been prepared.

There is no hard and fast rule as to how quickly a will, or for that matter a power of attorney, should be drafted after receipt of instructions. Clearly two months is excessive, but how long will be acceptable will be dependent on the specific circumstances of the matter. On occasion, it may be necessary to have the documentation executed within hours. In other circumstances a couple of days may be acceptable. Particularly complex instructions or circumstances which require information to be gathered by the solicitor before documentation can be completed may extend the acceptable window for turnaround. However, in such cases and particularly in the event of a client’s imminent surgery or travel, solicitors should consider putting an interim will in place until the final version can be completed.

Third party influence?

Undue influence of the client by a third party, be it spouse, close relative or friend, is an issue that solicitors advising the elderly must be particularly alert to. In relation to wills, proof of coercion, either physical force or emotional pressure, to make the will in specific terms which was sufficient to overcome the testator’s own wishes is required. The burden of proof lies on the party alleging the influence. Nonetheless, solicitors should ensure that they have done all they can to minimise the chances of a successful challenge to the will.

When taking instructions for a will or power of attorney, meeting the client alone is good practice, though admittedly may not always be possible. Elderly clients will frequently bring one of their children or a friend to meetings to assist their understanding and provide guidance. In such cases and particularly if that individual is being appointed as an attorney or is a beneficiary in the will, a portion of the meeting should be with the client alone. This can easily be explained as common practice and the vast majority of clients will have no objection. Equally, efforts should be made to meet with the client on more than one occasion to establish consistency in the instructions and time should be taken to establish the client’s lifetime gifting history. As ever, detailed notes of the meetings should be kept on file and bespoke follow-up correspondence issued to the client.

Specialist knowledge

Many aspects of advice for elderly clients are specialist and require a detailed knowledge of legislation, case law and practice. Applications for guardianship and intervention orders under the Adults with Incapacity (Scotland) Act 2000 are good examples. Complex time limits and documentary requirements must be successfully navigated if an application is to be granted and the required powers conferred. Powers of attorney must contain certain phrases, be in a particular form and properly executed in order to be registered. Practising in these areas without sufficient experience is asking for trouble.

Elderly clients present specific challenges, even if their affairs are straightforward. Particular care must be taken if potential challenges and claims are to be avoided.

Shona Lowe is the Professional Support Associate in the Private Client and Financial Services Department at HBJ Gateley Wareing. Shona is an associate member of the Securities Institute and specialises in succession planning and private client taxation.

The information contained in this article provides only a general overview of subjects covered and is not intended to be taken as advice regarding any individual situation, and should not be relied upon as such.

Top risk management targets

The Society’s Insurance Committee has identified three categories of claim (based on frequency, severity and avoidability of claims) which it believes the profession should currently be targeting:

• Break notice defects

where break notices have not been served strictly in accordance with the terms of the lease and are therefore open to challenge by the landlord

• CML Handbook breaches

where there has been an error or omission in reporting to a lender which leaves the solicitor vulnerable to a claim if the lender suffers loss following the borrower’s default

• Overlooked securities and inhibitions

where outstanding securities or inhibitions disclosed in Form 12 and 13 reports produced prior to settlement are overlooked by seller’s and/or purchaser’s solicitors

The committee believes that the adoption of effective risk management measures could eliminate these types of avoidable claim from the Master Policy claims experience.

Adopting a systematic approach to these areas of risk, identifying possible gaps in your systems and procedures, and prioritising the actions to be taken to address those gaps, can prevent these types of claim featuring in your practice’s claims experience.