Discretionary management schemes and LPA wording


I have located a precedent regarding this (see below). The commentary suggests it should be included as an ‘Instruction’. In terms of the wording, if it is an ‘Instruction’, will the use of ‘may transfer’ upset anyone at OPG when it comes to registration of the same? In other words, ‘may’ reads to me more like a ‘Preference’ or something which is optional rather than being an Instruction which would be something which is mandatory.

"My attorneys may transfer my investments into a discretionary management scheme, even though this means that investment decisions will be made by the managers of the scheme and my investments will be held in the name of the managers of the scheme or their nominees.

If I already hold investments in a discretionary management scheme before I became unable to make financial decisions, I want the scheme to continue."

Your comments or suggestions as to adaptation of wording would be most welcome. It is a very lengthy process to remove clauses if the OPG do not find these to be acceptable.

I’ve always included it as an instruction rather than a preference, even after the OPG introduced their current guidance that you don’t need the clause at all. Just helpful as belt and braces in case their guidance changes again.

1 Like

I add in preference since the OPG guidance as strictly speaking it’s no longer necessary. But I agree it should be included to make it clear for the Attorneys.

Thank you Eddie and Karl for your input.

In Lexis Nexis they state it should be in ‘Instructions’. Has anyone included this exact wording in Instructions and had any problems?

That is the wording I have always used (I think it is the wording suggested by HMCTS/OPG itself) and I have never had any problems with it. The use of the word may is to allow the attorney the opportunity to utilise such a vehicle rather than the obligation to invest in such a product.

Even though the guidance (and recent judgements) have said that such an instruction is no longer necessary I understand that not all banks believe that the implied power exists and continue to require it. I put it on every LPA I prepare. I take the view that it is better to have it and not need it than the other way around.

1 Like

Thank you for your helpful comments.

Here is an alternative wording for those who don’t want their family wealth exposed to manager risk.
I do not want my liquid assets to be managed by either a discretionary or an active fund manager. My attorney may engage an FCA regulated financial adviser to produce and agree an investment policy statement based on a detailed lifetime cash flow forecast and a sustainable withdrawal rate. The adviser must seek my attorney’s approval for any changes to my financial plan. My attorney will preserve my wealth by ensuring that the combined cost of custody, fund management and advice is limited to 1.5% per annum or less. My attorney may simplify my affairs by holding most of my liquid assets (approximately 90% or more) in a very low cost globally diversified passive equity fund. The remainder (approximately 10% or less) should be held in cash or gilts in readiness for up to two years’ expected expenditure.