Mind over matter – when to consider a lasting power of attorney
Thinking about the future and what may happen to us in later life is a difficult and sensitive subject. Planning for the “what ifs” is often avoided. Irrespective of age and health, putting in place a lasting power of attorney (LPA) is now an essential step in planning your personal affairs, giving you complete peace of mind for the future.
What is an LPA?
An LPA is a legal document whereby you (the donor), nominate one or more trusted friends or relatives (the attorney) to look after your personal affairs and make decisions on your behalf should you become unable to do so yourself. To be valid, the donor must be over 18 and have the requisite mental capacity to make the LPA. Additionally, the LPA must be in the prescribed form, properly executed and registered with the Office of the Public Guardian (OPG).
There are two independent types of LPA. The donor may execute one or both LPAs and include the same or different provisions and attorneys in each:
- Property and finance
The attorney has authority to handle property and financial matters for the donor including selling property belonging to the donor, buying property in the donor’s name, paying the mortgage, arranging property repairs, managing bank accounts, investments, and buying items the donor needs.
- Health and welfare
The attorney has authority to make decisions relating to the social and personal needs of the donor including where the donor lives, how the donor is cared for, healthcare, what you should eat and who you should see. The donor can also make specific provision in the LPA about life-sustaining medical treatment, such as major surgery and cancer care.
The attorney does not have authority to act under the LPA until it is registered with the OPG. In addition, for health and welfare LPAs, the attorney cannot act until the donor has lost the mental capacity to make decisions. This restriction may also apply to property and finance LPAs if the donor so requires and specifies in the document.
Choosing your attorney is probably the most important decision to make. You should appoint someone you trust, who knows you well and understands your affairs. There is no limit to the number of attorneys you can appoint but the higher the number, the more difficult it is to manage your affairs.
An attorney has a duty to act in the donor’s best interests, in accordance with the terms of the LPA and to help you make decisions if possible rather than automatically taking control. An attorney can take advice on decisions from, for example, a financial adviser, but cannot delegate responsibility under the LPA. In relation to finance, your attorney must keep your money separately from theirs and maintain accounts. You may ask for regular details of your finances for yourself or an appointed person such as a family member or solicitor giving an extra layer of protection.
The ability to make day-to-day decisions means we have mental capacity. The Mental Capacity Act 2005 states that a person is unable to make a decision if they cannot understand information relevant to a decision, retain the information long enough to make a decision, use that information, or communicate the decision.
As a safeguarding requirement, when making an LPA, you need a “certificate provider” to confirm that you are capable of making that choice and you have not been coerced into it. The certificate provider must be someone you have known for two years or professional such as a lawyer or a social worker.
What happens if I lose mental capacity and do not have an LPA?
Thinking about what happens if your faculties desert you may be uncomfortable and often avoided, but the situation is far worse if not planned for. Once you have lost capacity, it is too late. All financial affairs are frozen in the event of incapacity. Your spouse or other family members cannot deal with your personal matters without an LPA. In the absence of an LPA, an application for Deputyship will need to be made by the person intending to deal with your finances. This is a lengthy and costly exercise during an undoubtedly stressful time.
Changing your mind
If a donor remains of sound mind, it is possible to change a nominated attorney and make amendments to your LPA. An LPA can be terminated by a deed of revocation by the donor or disclaimer by the attorney. A divorce will also automatically revoke the LPA if a spouse is named as an attorney.
Practical points to consider
- Once submitted to the OPG it generally takes ten weeks to register the LPA. The power will be effective once registered unless the LPA specifies otherwise. Registering early is advisable in case the power is needed urgently.
- After registration, there is a three-week period in which objections to the LPA can be raised. You can name five people who are to be notified of your LPA. These people should know you well and be able to raise any suspicion that you were pressurised or lacked the capacity to complete the LPA.
- Any person over the age of 18 can set up an LPA. Loss of mental capacity can happen at any stage of life through accidents or illness. Once it is in place, an LPA is there for life and can be called upon when needed.
- An LPA is just as important as making a will. An attorney cannot make a will for you unless authorised to do so by the Court of Protection. Ensure you also have a will which is up to date.
- LPAs have replaced enduring powers of attorney (EPA). It is not possible to change an EPA into an LPA. However, EPAs set up before 1 October 2007 remain valid whether or not registered, although they must be registered when the person loses mental capacity.
- Assets in your sole name such as ISAs, savings and pensions cannot be accessed by a spouse if you lose mental capacity. Additionally, the British Banking Association has advised that when one joint account holder loses capacity, the other may not be able to access funds without an LPA.
- Online assets can pose problems for attorneys. You can help protect your digital assets by preparing a memorandum of digital assets containing usernames and passwords that can be stored with the LPA. Attorneys must still check the terms and conditions of the online assets before accessing them.
The LPA is a powerful legal document. Seeking specialist legal advice will ensure that you fully understand the effects and implications of the power. No one knows what the future holds but taking steps to plan and protect your personal affairs is one decision not to put off until tomorrow.
Bennett Griffin are award-winning solicitors based in West Sussex with offices in central Worthing and Ferring. Our experienced and specialist solicitors offer a comprehensive service and will work with you in an honest, considered, and practical manner. Our wills, trusts, and probate department can advise and assist you in relation to making an LPA. Please contact us on 01903 229 999 or by email at email@example.com more information.
The information contained in this article is for general guidance only and is not intended to be legal advice. Professional advice should always be taken on the application of the law in any particular situation.