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Lasting Power of Attorney – what is it?
The Lasting Power of Attorney (known as LPA) was introduced on 1st October 2007 – it is now the main way to give an attorney the authority to look after a person’s financial affairs. The LPA operates both before and after a person becomes incapable of managing their own affairs.
An LPA allows you to name someone you trust to manage your affairs in the event that you are no longer capable. Lasting Powers of Attorney for monetary matters and property can be used as soon as they are registered -although the donor’s directions have to be followed, except when they lose mental capacity.
LPAs are significantly more complex than the Enduring Power Of Attorneys they replace (for more about EPAs – see below). And, unlike EPAs, Lasting Powers of Attorney must be registered with the Office of the Public Guardian (OPG) before an attorney has power to act and there is a Court fee payable for the registration, currently £110 (although there are certain remissions and exemptions for this fee for those on means tested benefits and low incomes).
Anyone agreeing to act as an attorney under an LPA should be aware that they take on significant responsibilities under the Mental Capacity Act 2005.
LPAs are becoming increasingly popular, with almost 771,000 granted in 2018. According to the latest figures released by the Ministry of Justice in 2019, around 3.5 million Lasting Powers of Attorney are now in place.
Who can make a lasting power of attorney?
There are only two conditions.
1. Firstly you must be 18 or over.
2. Secondly your LPA must, however, be signed while you are in good health and still mentally capable ( ie you are able to make a decision for yourself at the time when that decision needs to be made). An LPA can come into effect before, as well as after, you become incapable of managing your own affairs.
The importance of an LPA – don’t just take our word for it
So convinced of the necessity of lasting powers of attorney in the complex modern world is the Office of the Public Guardian, that a few years back it announced that its stated aim was to make sure that every UK citizen who is over 18 should have an LPA in place.
In fact here is a direct quote from the government’s own website under their “Lasting power of attorney – your voice, your decision” campaign
“A lasting power of attorney (LPA) will protect you and your future, even if you never need it.”
7 key reasons to make a Lasting Power of Attorney
The loss of the breadwinner can be devastating to any family. One of the steps you can take to reduce the problems your family may face in the future is to leave a Will – you might have already done so. It’s always good advice to ensure that you have a valid Will and that it is regularly updated.
Many people however leave it at that, believing that they have put into place all the arrangements and protection that their family needs. But what would be if you were involved in an accident, or became victim of a disease which does not result in your death but in the loss of your ability to manage your affairs? Your family could be left facing serious financial and practical difficulties at a time when they are least able to cope.
All this can be avoided if you instruct a solicitor to prepare a Lasting Power of Attorney whilst you are still in good health and of sound mind. These days an LPA can be as vital as a Will.
However, unlike a Will (which should be reviewed every few years or whenever your personal circumstances change), unless you want to change the attorney or change the powers you are giving to them, you should not need to make an LPA more than once.
So here are those 7 key reasons
1. They are much cheaper, easier and quicker than a court of protection application
o If you do not have a Lasting Power of Attorney then any person who wishes to make decisions for you when you do not have the mental capacity to make decisions, will have to apply to the Court of Protection to be appointed a Deputy.
o This can be slow, distressing for a loved one, inconvenient and expensive
o You avoid the annual Court of Protection deputy fee – currently £320 – which is not payable for a registered or active LPA.
2. You choose who has the legal authority to take decisions for you if you can’t at some time in the future.
o You name somebody that you know and trust.
o You can also choose substitute or replacement attorneys to carry out the role for you if the first nominated attorneys can’t.
3. You limit the things that can be done in your name. Or you limit what can be done by a single attorney acting alone by specifying some decisions need agreement of all the attorneys.
4. You retain easy access to your money
o You avoid having no access to bank accounts in your name that normally occurs on the loss of capacity.
o The delay getting legal authority to unfreeze your bank account could be six months or more.
5. You can use your Property and Finance LPA before you lose mental capacity
o This could allow your attorney to do things on your behalf if they are difficult for you e.g. dealing with your local bank.
o It can also be used when you are away for a period abroad e.g. giving a child the right to do certain things on your behalf.
6. You can give advance directions about your medical treatment
o If you have strong feelings about being allowed to die with dignity in certain circumstances, you can give the power to your attorney to refuse life sustaining treatment.
7. Peace of mind
o You will have the peace of mind that comes from knowing that you have your Lasting Power of Attorney in place which will mean there will be the absolute minimum of disruption and associated problems should you lose capacity.
Two different types of LPA
You can give an attorney power to look after just your money and property or you can choose to give the attorney the power to make decisions about non-financial matters.
- The Property and Affairs LPA gives someone you appoint the power to look after your money and property (like their predecessors, the EPAs). It can give the attorney authority to act both before and after the onset of mental incapacity.
- The Personal Welfare LPA gives an attorney the power to make decisions about non-financial matters, such as where one should live or what medical treatment you have. Being granted an LPA could mean that you have to make tough decisions about some very personal issues – e.g.,
- where the donor of the LPA lives
- whether you feel the donor is still able to live at home with support, or, if not, choosing the right nursing home or care home for them
- whether the donor should receive particular healthcare treatment or not
The Personal Welfare LPA, however, can be used by the attorney only after a person has lost capacity and, once again, has to be registered with the Office of the Public Guardian before it can be used.
Are LPAs only relevant for older people?
Absolutely not. However, although the use of the lasting power of attorney has grown hugely in the last few years, as recently as May, 2019, the Office of the Public Guardian has been targeting anybody over the age of 18 for an LPA.
In fact here is the direct quote from the OPG’s Safeguarding Strategy 2019 to 2025:
“We believe that all adults over the age of 18 should make an LPA so that someone they trust can make decisions for them in case they lose mental capacity.”
Who can I appoint as my attorney?
You have complete freedom in your choice of attorney although they must be aged over 18 and be neither bankrupt or mentally incapable.
However it’s very important to appoint the right person as your attorney – because you’re giving them significant responsibility over your affairs.
Among the factors you might want to consider when making that decision are the following:
- How well you really know them?
- Do you trust them to make the right decision for you?
- What are they like at looking after their own finances, and running their own life?
- Will they really want to take this responsibility on?
Can I give my attorney guidance in advance?
Yes – You are able to give guidance to your attorney in the LPA about matters you would like to have considered when decisions are made about you by your attorney.
What happened to the Enduring Power of Attorney?
The previous type of power of attorney, the Enduring Power of Attorney, can no longer be created. However, existing EPAs, ie those granted before 1st October 2007, will continue to be effective.
The LPAs are much longer documents than the old EPAs. Primarily, this is because the person giving the power (‘the donor’) has far greater choices, for example:
- the donor can appoint a replacement attorney to act if an original attorney can no longer do so;
- restrictions and conditions can be placed on the attorney;
- the donor is able to give guidance to his attorney about matters he would wish considered when decisions are made;
- the donor can nominate who they would like to be notified of registration of the LPA.
Click here to read more about the Enduring Power of Attorney, and the differences between it and the Lasting Power of Attorney
Is it the same as a General or Ordinary Power of Attorney?
No – the LPA and the General Power of Attorney (GPA) are quite different. In particular, the GPA can only operate when the Donor has mental capacity, and is often only a temporary authority. It is often used in business.
Click here to read more about the General Power of Attorney
What is a Certificate Provider?
Another major difference between the LPA and the old EPA is that there is a requirement for a Certificate Provider. This is a person who has to certify that the donor understands the purpose of the LPA, the extent of the authority they are giving to the attorney and that the donor is not being influenced or pressurised into giving the Lasting Power of Attorney.
Certificate Providers are people who have either known the donor personally for a minimum period of two years, or someone chosen by the donor who has the relevant professional skills and expertise to certify the LPA, e.g. a solicitor or a doctor.
Attorneys under Lasting Power of Attorneys are under an obligation to act in accordance with the principles of the Mental Capacity Act 2005 and to have regard to the Act’s Code of Practice. The objective of the new legislation is to be supportive and enabling, so that attorneys should always try to encourage their donor to make and/or participate in decision-making whenever possible.
Mental Capacity – What it is and What it Means
The 2005 Mental Capacity Act was introduced to bring further clarification to the somewhat cloudy legal area of mental capacity. The two main parts of this Act are “capacity” and “best interests”.
According to the Act, a person does not have mental capacity when the mind or brain does not allow them to make a decision for themselves at a given time. Lack of mental capacity is not always regarded as a permanent state. Some people may lack mental capacity at certain times and in making certain decisions.
When a person lacks capacity:
- They can’t understand how to make a decision or the consequences of their choice
- Memory retention is so short that they cannot remember the details and circumstances surrounding a decision
- They can’t put information to use in the decision making process
- They are unable to communicate their decision in any way
When a person is seen to lack mental capacity, those making decisions on the person’s behalf must choose what is in the person who lacks mental capacity’s best interests.
It is assumed a person possesses mental capacity until it is proven otherwise; and several methods have been used to try and help the person make their own decisions.
Lacking mental capacity – common causes
There are a number of reasons for lack of capacity, and some may be temporary – such as being hospitalised after a serious accident. However LPAs are more brought into effect when someone loses capacity on a permanent basis. Amongst the most common causes for that are the following:
- a severe learning disability
- a serious brain illness or injury
Click here to read more about mental capacity
What happens if someone loses mental capacity and has not made an LPA?
Without a Lasting or Enduring Power of Attorney in place, if someone loses the ability to manage their affairs, then it is likely that the Court of Protection will need to be involved.
Click here to read more about the Court of Protection
What an attorney needs to consider
An attorney appointed to represent a person’s best interests needs to take a number of factors into account:
- Current wishes of the person
- Past wishes of the person
- Values and beliefs of the person
- Other relevant views from people such as family members
The Office of the Public Guardian has prepared guides that are essential reading for people considering making an LPA and for their proposed attorneys.
Who decides if the donor had mental capacity or not?
The answers are provided by the Mental Capacity Act 2005 as follows:
• You start from the presumption that the donor does indeed retain mental capacity.
• Different levels of capacity are required for different decisions. For instance, quite a high level of mental capacity is required when large gifts are to be made; but a much lower level of capacity is required if, for example, the donor is just spending small amounts of money on themselves.
• Just because the donor makes an unwise decision does not mean they have lost capacity.
• Even when the donor is not deemed to have sufficient capacity for the decision in question, they must be involved and consulted so far as possible in the circumstances.
It is therefore absolutely critical that when making a Lasting Powers of Attorney the donor appoints a trusted attorney who they believe will stick to their wishes and respect their right to make decisions.
Can a Property and Finance LPA take effect if I retain mental capacity?
Yes – provided it is drafted correctly this is possible. But only after the LPA has been registered with the Office of the Public Guardian.
Please note that in practice, this is not suitable for urgent action unless registration has taken place. But even in normal circumstances, registration takes around 12 weeks. That’s where the General Power of Attorney (see above) comes in – a simple and instant solution.
What happens if there is concern about abuse of an LPA?
If concerns are raised about the possibility of abuse of a power of attorney, in some instances where the donor retains some level of capacity, the Power of Attorney can be revoked.
What’s more, if there are concerns about abuse of vulnerable people by their attorneys or deputies, the OPG itself has the power to investigate. And those investigations are increasingly common. 1,897 investigations were carried out by the OPG in 2017/18 – a full 50% up in the previous year. These investigations resulted in 459 applications to the court for a discharge of the attorney or deputy.
In addition, in cases of abuse where the donor is no longer seen to retain sufficient mental capacity, then the local authority has the power to become involved.
Among the more common examples of abuse are the following:
- the attorney buying the client’s home under value
- the transfer of large sums of money from the client’s bank account to another person
- spending capital in an attempt to avoid liability for care home fees
- fraudulent LPAs
LPAs are longer and more complex than the old, simple EPAs. We are happy to give an estimate of our fees and let you have copies of the guides referred to above, for those considering making a Lasting Power of Attorney and those thinking about taking on the role of attorney.