How Attorneys Should Manage Finances
A practical guide to managing someone else's money responsibly under a Property & Financial Affairs LPA.
Written by James Tyrrell · Reviewed by Anthony Dalton · Last reviewed
Imagine being handed the keys to someone else's entire financial life — their bank accounts, their savings, their bills, their home. That is essentially what happens when you are appointed as an attorney under a Property & Financial Affairs LPA. The Mental Capacity Act 2005 and the OPG's Code of Practice set out clear standards for how attorneys must handle money, property, and financial decisions. Getting it right protects both the donor and you as the attorney.
At a glance
- The most important rule: never mix the donor’s money with your own — keep all accounts and funds completely separate
- Keep detailed records of every transaction, including receipts, bank statements, and a running log of income and expenditure
- Attorneys cannot pay themselves a salary but may reimburse reasonable out-of-pocket expenses with clear records
- The Office of the Public Guardian can investigate at any time and the Court of Protection can revoke the LPA if mismanagement is found
Keep the Donor's Money Separate
The single most important rule for financial attorneys is to never mix the donor's money with your own. This means you must not transfer the donor's funds into your personal bank account, use the donor's debit card for your own purchases, or treat the donor's assets as though they belong to you.
In practice, this means:
- The donor's bank accounts should remain in the donor's name, with you registered as their attorney
- If you need to open a new account on the donor's behalf, it should be clearly designated as belonging to the donor
- Any money you spend on behalf of the donor should come from the donor's accounts, not yours (and vice versa)
- If you pay for something on the donor's behalf from your own pocket, reimburse yourself promptly and record the transaction clearly
Key point: Banks and building societies are experienced in dealing with LPAs. Contact each financial institution to register as attorney — they will guide you through their process and set up appropriate access. Read more about how attorneys access bank accounts.
Keep Accurate Records of All Transactions
As a financial attorney, you are accountable for every penny you spend, receive, or invest on the donor's behalf. The Office of the Public Guardian (OPG) can ask to see your records at any time, and family members or other interested parties may also want reassurance that the donor's money is being handled properly.
Good record-keeping should include:
- A running log of all income received (pensions, benefits, rental income, investment returns)
- A record of all expenditure — what was paid, to whom, the amount, the date, and the reason
- Bank statements for all of the donor's accounts, filed in date order
- Receipts and invoices for significant purchases, care fees, repairs, and professional services
- Records of any gifts made on the donor's behalf (including the occasion, recipient, and amount)
- Investment records showing the rationale for any changes to the donor's portfolio
A simple spreadsheet is often sufficient, though you can also use a notebook or accounting software. The important thing is that your records are clear, complete, and easy for someone else to follow.
Pay Bills and Manage Day-to-Day Finances
One of the most common tasks for a financial attorney is ensuring the donor's bills are paid on time. This includes:
- Household bills — council tax, utilities (gas, electricity, water), telephone, broadband, and insurance
- Care fees — if the donor is in residential care or receives home care services
- Mortgage or rent payments
- Insurance premiums — home, car, life, and health insurance
- Subscriptions and memberships — review these and cancel any that are no longer needed
Setting up direct debits from the donor's account is often the easiest way to ensure regular payments are not missed. Check statements regularly to make sure payments are being taken correctly and that no unauthorised transactions have occurred.
How to Invest the Donor's Money Prudently
If the donor has savings or investments, you have a duty to manage them prudently. This does not mean you need to be a financial expert, but it does mean you should act responsibly and seek professional advice when dealing with matters beyond your knowledge.
Key principles for managing the donor's investments include:
- Protect the capital — the donor's money should not be put at unnecessary risk
- Consider the donor's needs — how much income do they need now? How much might they need in the future for care costs?
- Diversify — do not put all of the donor's money into a single investment
- Take professional advice — for anything beyond straightforward savings accounts, consider consulting an independent financial adviser (IFA)
- Avoid speculation — risky investments such as cryptocurrency, spread betting, or highly volatile stocks are generally inappropriate for a donor's funds
Tip: If the donor previously managed their own investments, consider their existing approach and risk tolerance. A sudden shift in investment strategy could raise questions about whether you are acting in the donor's best interests. Learn more about what financial decisions attorneys can make.
Tax Returns and HMRC
As a financial attorney, you are responsible for ensuring the donor's tax affairs are kept in order. This includes:
- Filing Self Assessment tax returns if the donor is required to complete one (for example, if they have rental income, self-employment income, or capital gains)
- Paying any tax due on time to avoid penalties and interest
- Claiming any allowances or reliefs the donor is entitled to
- Notifying HMRC of your role as attorney — you can register to deal with the donor's tax affairs on their behalf
- Keeping records of all tax-related correspondence and payments
If the donor's tax affairs are complex, you should consider instructing an accountant to handle them. The cost of professional tax advice can be paid from the donor's funds as a legitimate expense.
OPG Oversight and What Happens If Things Go Wrong
Unlike court-appointed deputies, attorneys under an LPA are not routinely supervised by the Office of the Public Guardian. That said, the OPG has the power to investigate if a concern is raised about how an attorney is managing the donor's finances.
If the OPG contacts you, you must cooperate fully. They may ask you to:
- Provide a full set of accounts showing all transactions
- Explain specific decisions or expenditure
- Provide bank statements, receipts, or other supporting documents
- Attend a meeting or interview
If the OPG finds evidence of mismanagement or abuse, they can refer the matter to the Court of Protection, which has the power to revoke the LPA, remove you as attorney, or order you to repay any money that has been misused. In serious cases, criminal prosecution may follow. Understanding your full duties as an attorney is essential to avoiding problems.
Remember: Managing someone else's finances is a position of trust. Keep meticulous records, act transparently, and always put the donor's interests first. If you are ever unsure about a decision, seek professional advice — the cost is a legitimate expense that can be paid from the donor's funds.
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Key Takeaways
- Separation of funds is non-negotiable — the donor’s bank accounts must stay in the donor’s name with the attorney registered as such
- Record everything — a running log, bank statements, receipts, and investment rationale should be maintained and easy for someone else to follow
- Gifts are strictly limited — under the Mental Capacity Act 2005, attorneys may only make gifts of reasonable value on customary occasions to people the donor would normally give to
- Seek professional help for complex matters — tax returns, investment management, and complex financial affairs can be handled by accountants and IFAs, paid from the donor’s funds as a legitimate expense
- The OPG can investigate without warning — unlike deputies, attorneys are not routinely supervised, but the OPG retains the power to request full accounts and supporting documents at any time
Quick Answers on Managing Finances as an Attorney
Can an attorney pay themselves from the donor's money?
An attorney cannot pay themselves a salary or take money for personal use. However, they may reimburse themselves for reasonable out-of-pocket expenses incurred while carrying out their duties, provided they keep clear records of each transaction.
What gifts can a financial attorney make on behalf of the donor?
Under the Mental Capacity Act 2005, attorneys may only make gifts of reasonable value on customary occasions such as birthdays, weddings, or religious holidays. The gift must be to someone the donor would normally give to, and its value must be proportionate to the donor's estate.
What happens if an attorney mismanages the donor's finances?
The Office of the Public Guardian can investigate concerns about financial mismanagement. If abuse is confirmed, the OPG may refer the case to the Court of Protection, which can revoke the LPA, remove the attorney, order repayment, or refer the matter for criminal prosecution.
This guide was last reviewed and updated on . Information is based on current legislation and OPG guidance for England and Wales.
Official Guidance
Government guidance on GOV.UK
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