Lord Tyre of the Court of Session issued a judgement on 7 March
2012 concerning an important question which has not previously come
before the Scottish courts. That is, to consider the position where
an Attorney acting under the terms of a Continuing (financial)
Power of Attorney disposes of an item of property from the
granter's estate and that item of property had been bequeathed
in the granter's Will, the question being, on the
testator's death did the legacy adeem (i.e. was it cancelled)
or was it converted so that the beneficiary is entitled to a sum
equivalent to the proceeds of sale of the item?
The facts of the case were agreed between the parties. In 1996,
Miss Isabella Gordon granted a Power of Attorney in favour of her
solicitor which included the power to sell any part of her estate.
In 1997 she executed a Will in which she bequeathed her home in
Stonehaven to John Gordon. In 2001, Miss Gordon became incapable of
managing her own affairs and moved into a nursing home. Although it
was not necessary to fund the care costs, her Attorney sold her
home as 'a prudent act of administration, having regard to the
disadvantage in leaving the house empty with attendant maintenance
costs'.
Lord Tyre decided that as the sale of the house by the Attorney was
a housekeeping exercise rather than a necessary act to fund Miss
Gordon's care, the legacy was not adeemed by the sale. As the
house itself was no longer available, the legatee was entitled to
receive a sum equivalent to the proceeds of sale of the house and
in addition, a sum equivalent to the net amount that had actually
been earned by deposit or investment of the proceeds since the
house was sold. This decision also makes it clear that the sale
proceeds of the house continue to be regarded as heritable in the
testator's succession, which could have important effects if
legal and prior rights are involved.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
