While many people think to put a will in place, which takes legal effect after the will-maker dies, a Lasting Power of Attorney can sometimes be a more suitable solution.

We’ll cover the following:

 

What is a Lasting Power of Attorney?

A lasting power of attorney (LPA) is a legal document that lets an individual (known as the ‘donor’) appoint one or more people (known as ‘attorneys’) to help them make decisions, or for them to make decisions on their behalf. 

Having one prepared safeguards personal wishes and, most importantly, allows a trusted family member or friend to make important decisions on the donor’s behalf.

Secondly, an LPA for financial affairs can also be used if a donor requires temporary assistance with financial or property affairs in their absence, such as a spell in hospital or a stay abroad.

As an LPA is a sensitive and complex document that lasts for the entire lifetime of the donor, it is best to seek the help of a professional when writing one, and ensure that this is kept under regular review.

 

When should I arrange Lasting Powers of Attorney?

Regardless of health, everyone should consider LPAs. These can be written for anyone from the age of 18 and typically take eight to 10 weeks to process. Accidents and illness can affect people of all ages and backgrounds, so it is advisable not to leave this exercise until you begin to feel unwell or mental capacity starts to become an issue.

Property and financial affairs lasting power of attorney

Once the lasting power of attorney has been registered with the Office of the Public Guardian, and provided that it is unrestricted, you will be able to act for the donor for the rest of his or her life, as long as the power is not revoked.

You will be able to act for the donor because he or she asks you to, or because he or she has lost the mental capacity to deal with his or her property and financial affairs, in whole or in part.

Health and welfare lasting power of attorney

You will only able to act for the donor if the lasting power of attorney has been registered with the Office of the Public Guardian and only if the donor does not have sufficient mental capacity to make the relevant health or welfare decision himself/herself.

In both cases, under the Mental Capacity Act 2005, whether or not the donor has, or has not got, sufficient mental capacity to make the relevant decision at the relevant time is issue and decision-specific.

If the lasting power of attorney has not been registered with the Office of the Public Guardian, you will have no legal powers. The donor can register the lasting power of attorney while he or she is mentally capable, or you can apply to register the lasting power of attorney.

There is no power for you to make any decision for the donor under the lasting power of attorney during the registration process. However, if the donor has capacity and needs some urgent assistance with his or her finances, a general power of attorney can be set up to cover this interim period.

 

What are the types of Lasting Power of Attorney?

The types of decisions you can make will depend on whether you’re an attorney for:

  • property and financial affairs;
  • health and welfare; or
  • both.

You may have been appointed either alone, jointly (where all attorneys need to sign/make a decision each time together), or jointly and severally (where all or any one attorney can sign/make a decision) with another, or others).

If required, different attorneys can be appointed for each and in the event something happens to an attorney, a replacement can be appointed.

Although these are separate documents, it is highly recommended that the two are prepared and registered at the same time to ensure that any necessary decisions can be taken by the donor’s family, and to ensure that all assets are accessible.

 

The consequences of not having a Lasting Power of Attorney

In the event the donor loses mental capacity, and does not have an LPA in place, loved ones will be required to apply for the right to manage their financial and health affairs through the court. Consequently, taking this matter to court can often be a lengthy and costly process.

 

Do I need a lasting power of attorney for my business?

It is also possible, in some circumstances, to put two property and financial affairs lasting powers of attorney deeds in place; one relating to your personal finances and property matters and one relating specifically to the running of a business or businesses on your behalf – sometimes called a business LPA. The rules around the use of a business LPA are complex and it is important that both this LPA and your personal finance and property LPA are drafted in such a way that they work together and your attorney’s role is clearly defined or limited as necessary.

Therefore, setting up an LPA whilst capacity is present can prevent loved ones from additional stress during a difficult time.

 

What decisions can be made under a power of attorney?

Lasting powers of attorney are so powerful, which is why you must appoint an attorney or attorneys that you trust wholeheartedly to make the right decisions for you. Sometimes, contrary to popular belief, family members such as adult children are not always the appropriate people to appoint in the role. We will happily discuss the practicalities and important points to consider when choosing an attorney with you.

 

How do I appoint someone as an attorney?

You first need to prepare your lasting power of attorney (LPA) deed, setting out how and when your chosen attorney(s) can act on your behalf. If you wish to appoint an attorney to manage both your property and financial affairs as well as your health and welfare matters, you will need to prepare two separate LPA deeds.

You and your chosen attorney(s) must then sign your LPA deed for it to be valid. Your attorney(s) signs it to confirm that they are happy to accept the role and that they will make any decisions they have to in your best interests and yours alone.

Usually, a solicitor will also sign the LPA deed as your certificate provider. This means they sign the deed to confirm that, in their opinion, you understand the LPA and that you are not under any pressure from third parties to put it in place against your will.

Once the LPA deed has been signed it is valid, but not effective, and cannot be used by your attorney(s) to help you until such time as it has been registered with the Office of the Public Guardian.

 

How does a power of attorney work?

As and when your attorney(s) believe they need to begin using the power in your best interests, they need to ensure that third party organisations (such as your bank, utility providers and HM Revenue and Customs) have sight of the registered power of attorney deed and record their legal entitlement to discuss your affairs with them. Often this involves your attorney(s) sending certified copies of the registered deed to the various organisations.

Sometimes your attorney(s) may seek confirmation from a doctor that you have lost or are losing capacity before they will try and step in and act on your behalf. Often a diagnosis of something like Alzheimer’s is the trigger for the attorney(s) to begin preparing to help you.

Although your attorney(s) can make decisions for you, they are obliged to involve you as much as possible in the decision-making process. In the vast majority of cases, you will be able to make some decisions about your affairs yourself, even if you need a little help. If you can then you must be allowed to make those decisions. Regardless, whatever decision is made for you, your attorney(s) must make those decisions based on what they perceive to be in your best interests. They cannot use their authority over your affairs to benefit others.

Your registered health and welfare power of attorney should be noted on your medical records so that if you are admitted to hospital your doctors will be able to determine who they should contact about the care or treatment they intend to give you.

 

Who can witness a power of attorney signature?

Anyone can witness your signature as the donor (the person setting up the LPA), provided they are over 18, not an attorney or a replacement attorney (or employed by one of your attorneys or replacement attorneys).

When your attorney(s) or replacement attorney(s) sign the deed, again anyone over the age of 18 can witness their signature, except you as the donor. This does mean that attorneys or replacement attorneys can witness each other’s signatures.

In order to avoid any allegation or suspicion of impropriety, however, we would recommend that someone entirely independent from the process acts as a witness if possible – such as a friend or neighbour.

 

How long does it take to get a power of attorney?

We can support you with preparing your LPA deed very quickly. However, if you have appointed more than one attorney or replacement attorneys then the LPA deed will have to be sent to each of them in turn to sign it – which may take a few weeks.

Once all parties have signed the LPA deed and it is submitted to the Office of the Public Guardian, the registration process can take eight to 12 weeks.

 

How much does it cost to prepare a power of attorney?

Our fees start at £750 plus VAT for each LPA deed prepared. This includes one of our solicitors acting as your certificate provider, liaising with your attorney(s) and, ultimately, registering the document with the Office of the Public Guardian for you.

The Office of the Public Guardian charges a fee of £82 per LPA deed in order to accept an application to register it. It is sometimes possible to reduce the fee, or apply for a total fee exemption, if your financial circumstances mean that you qualify for the same. We can apply for any assistance you may be entitled to on your behalf.

 

How do I trigger a power of attorney?

Once all the relevant parties have signed your power of attorney deed, it is valid but not effective and it cannot be used by your attorney(s) to help manage your affairs in that state.

In order to ‘invoke’ the power of attorney deed (and make it legally effective), either you or your attorney(s) must apply to register it with the Office of the Public Guardian. Once it is returned, we can store the original registered LPA deed in our strong-room to ensure it is kept safe (you can request this from us at any time).

If your attorneys need it because they need to begin using it, they will need to provide us with their ID and a note from a doctor evidencing your lack of capacity before we will release it to them. We can issue certified copies of the LPA.

 

How do I change my power of attorney?

A power of attorney deed cannot be amended once signed by all parties. However, the individual appointment of an attorney can be revoked if necessary, provided you have the capacity to take the appropriate steps. In order to do this, you will need to prepare a deed of partial revocation which refers explicitly to the revocation of one (or more) of the original named attorney(s) or replacement attorney(s). The remainder of the LPA deed will remain effective.

If you intend to revoke the appointment of more than one attorney or replacement attorney, it will often be easier to revoke the entire power of attorney deed and replace it with a new one.

It is important that you seek advice before attempting to revoke the appointment of an attorney, as the legal implications of doing so might render the deed entirely ineffective depending on how it is drafted.

 

How do I cancel a power of attorney?

Your LPA deed can be revoked by you, even once registered with the Office of the Public Guardian, provided you still have capacity. In order to do this, you will need to prepare a deed of revocation and send this to the Office of the Public Guardian which will register the revocation centrally.

If you intend to revoke a power of attorney, you should consider replacing it with a new one as soon as possible in order to ensure your affairs can be managed by your newly chosen attorney(s) if you lose capacity.

 

How long is a power of attorney valid?

A power of attorney is valid for life, until you chose to revoke it, or until all your chosen attorneys and/or replacement attorneys have died.

Your LPA deed ceases to have effect immediately on your death and your attorneys lose the authority they had to act at that point in time. Instead, your chosen executors in your will take over the management of your affairs and administer your estate. Your chosen attorneys and executors may be the same people, but it is important that they are acting under the correct authority at any point in time. Read more about the importance of having a will in place.

 

Things attorneys can and can’t do

What you can do as an attorney
Property and financial affairs lasting power of attorney

When acting under a property and financial lasting power of attorney you will be able to do most things the donor could have done in relation to his or her finances and property, provided there are no restrictions in the document. Some examples of what this might include are:

  • Buying or selling property
  • Opening, closing or operating any bank, building society, or other, account
  • Giving access to the donor’s financial information
  • Claiming, receiving and using (on the Donor’s behalf) all state benefits, pensions, allowances and rebates (unless someone called an ‘appointee’ has already been appointed to do this and their appointment has previously been notified to the Department for Work and Pensions, and everyone is happy for this to continue)
  • Receiving any income, inheritance or other entitlement on behalf of the donor
  • Dealing with the donor’s tax affairs
  • Paying the donor’s mortgage, rent and household expenses and other bills
  • Insuring, maintaining and repairing the donor’s property
  • Investing the donor’s savings and, as necessary appointing, or liaising with an investment manager in regard to the donor’s investments
  • Making limited gifts on the donor’s behalf
  • Paying for private medical care and residential care or nursing home fees
  • Applying for any entitlement to funding for NHS care, social care or adaptations.
  • Using the donor’s money to buy a vehicle or any equipment or other help they need
  • Repaying interest and capital on any loan taken out by the donor

However, in all cases, these decisions can only be made if acting in the best interests of the donor.

Health and welfare lasting power of attorney

When acting under a health and welfare lasting power of attorney, unless the document restricts you, you will be able to make decisions about the donor’s personal welfare, health and care, which could include:

  • Where the donor should live, and who they should live with;
  • The donor’s day-to-day care, including diet and dress;
  • Whom the donor may have contact with;
  • Consenting to, or refusing, medical examination and/or treatment on the donor’s behalf;
  • Arrangements required to be made for the donor to be given medical, dental and/or optical treatment;
  • Assessments for, and provision of, community care services;
  • Whether the donor should take part in social activities, leisure activities, education or training;
  • The donor’s personal correspondence and papers;
  • Rights of access to personal information about the donor; and/or
  • Complaints about the donor’s care or treatment.
What you can’t do as an attorney

Whether you’re an attorney acting under a Property and financial affairs lasting power of attorney or a health and welfare lasting power of attorney, you cannot:

  • change the donor’s will; or
  • gift their assets away.

 

In your role as an attorney, you have important duties and responsibilities. These are set out in the Mental Capacity Act 2005 and are explained in the Mental Capacity Act Code of Practice,

However, the following provisions are particularly important:

1. You must follow the principles set out in section one of the Act:

Principle 1 – It should be assumed that everyone has capacity to make his or her own decisions, unless it is proved otherwise.

Principle 2 – A person should be provided with all the help and support possible to make and communicate their own decision, before anyone concludes that they lack capacity to make their own decision.

Principle 3 – A person should not be treated as lacking capacity just because they make an unwise decision.

Principle 4 – Actions or decisions carried out on behalf of someone who lacks capacity must be in that person’s best interests.

Principle 5 – Actions or decisions carried out on behalf of someone who lacks capacity should limit their own rights and freedom of action as little as possible.

2. You must always act in the donor’s best interests

There is guidance in chapter five of the Code of Practice to help you. However, in general terms you need to consider the donor’s past and present wishes and feelings, beliefs and values and,where practical and appropriate, consult with:

(a) anyone caring for the donor;

(b) close relatives and anyone else with an interest in their welfare; and/or

(c) other attorneys appointed by the donor.

Always check whether the donor has sufficient mental capacity to make a particular decision themselves. Remember, you can act under the property and financial lasting power of attorney if the donor does have mental capacity, if they have asked you to act in such circumstances, and there are no restrictions in the document. However, you can only act under a health and welfare lasting power of attorney if the donor does not have sufficient mental capacity to make that particular health and welfare decision.

3. Only make those decisions the lasting power of attorney gives you authority to make

For example, if you are only acting under a property and financial affairs lasting power of attorney, you cannot make decisions about the donor’s personal care, such as medical treatment. If the lasting power of attorney is restricted in any way, your authority is limited. If you need further powers in the future, you will be able to apply to the court.

Likewise, if you are only appointed as a health and welfare attorney, you have no power to make decisions about the donor’s financial investments.

4. Other duties under a lasting power of attorney
  • Apply certain standards of care and skills (duty of care) when making decisions;
  • Carry out the donor’s instructions;
  • Do not take advantage of your position and do not benefit yourself, but benefit only the donor (fiduciary duty);
  • Do not delegate decisions, unless authorised to do so;
  • Act in good faith;
  • Respect confidentiality;
  • Comply with the directions of the Court of Protection;
  • Do not give up the role without telling the donor and the Court;
  • Keep accounts if you are a financial attorney;
  • Keep the donor’s money and property separate from your own if you are a financial attorney
  • In relation to end-of-life decisions, where authorised under a health and welfare attorney, do not be motivated by the desire to bring about the donor’s death (you may wish to save the donor suffering and to comply with his or her wishes); and/or
  • Notify the Office of the Public Guardian, if the donor dies, or recovers.

 

How does an attorney decide if the donor has sufficient mental capacity?

The Mental Capacity Act sets out a two-stage test of capacity:

  1. Does the person have an impairment of, or a disturbance in, the functioning of, their mind or brain? Examples may include conditions associated with some form of dementia, or the long–term effects of brain damage.
  2. Does the impairment or disturbance mean that the person is unable to make a specific decision? This stage can only be reached if you have taken all practical steps to support the donor in making the relevant decision and this has failed.

A person is considered to be unable to make a decision if they cannot, on the balance of probabilities:

  • understand information about the decision to be made (the Act calls this ‘relevant information’);
  • retain that information in their mind;
  • weigh that information as part of the decision-making process; and
  • communicate their decision, by talking, using sign language or by any other means.

The Mental Capacity Code of Practice offers useful and practical examples in chapter four of the code of practice.

Essentially you need to give the donor as much opportunity to make his or her own decisions as possible before you decide to act, and ensure you have followed the suggested steps for establishing ‘that the donor lacks capacity to make a particular decision’.

 

What other powers of attorney are there?

If you simply want or need to appoint someone to act for you now to complete a transaction for you, for example, while you are out of the country, then preparing an LPA is unlikely to be the right thing to do. Instead, you may want to consider preparing an ordinary power of attorney (sometimes referred to as a general power of attorney).

The process of preparing an ordinary power of attorney is much less time consuming and is relatively straightforward.

How do Ordinary Powers of Attorney differ from Lasting Powers of Attorney?

If you need to sign paperwork now and in the future, you may not be able to get to the meeting but by planning ahead, arrangements can be made which should not delay your transactions or prevent it from happening entirely.  You can do this by appointing a temporary power of attorney.

The use of Ordinary Powers of Attorney does tend to be better suited to transactional or commercial contexts and there is an important distinction to be made between them and perhaps the more common Enduring and Lasting Powers of Attorney. The latter two types of power enable your attorney to continue acting on your behalf even if you lost your mental capacity. An attorney acting under an Ordinary Power of Attorney cannot continue acting in those circumstances – their authority ceases with you having lost mental capacity.

It is possible to delegate your legal authority to carry out tasks on your behalf to someone else using a deed – an Ordinary Power of Attorney. The type of authority you can delegate may include the authority to sign contracts or other deeds on your behalf. You become the “donor” and your trusted third party, your “attorney.”

It is possible to implement a wide ranging and general Ordinary Power of Attorney enabling someone to manage your property and financial affairs entirely on your behalf, or to carrying out one particular task or transaction for you. The first more general type is useful in circumstances when you are out of the country or perhaps in self-isolation for extended periods. The second, more specific type, is most common and more suitable if, in all other regards, you can continue to manage your own affairs but simply require the ability to delegate your authority to complete a specific task or transaction.

Whichever type of Ordinary Power of Attorney you decide upon is right for you, you can specify a time limit, at the end of which the authority of the attorney ceases. This cessation could occur even if the transaction they were completing on your behalf is still not complete in which case new authority would be needed by way of a newly executed document.

If you are concerned about the ongoing management of your affairs in the longer term, in particular in the event you lose mental capacity, you should consider preparing Lasting Powers of Attorney.

 

What Is an Enduring Power of Attorney?

Enduring Powers of Attorney were the predecessors to Lasting Powers of Attorney. It is not possible to create new Enduring Powers of Attorney but those already put in place continue to be legally effective. We can assist your attorneys to register the document with the Office of the Public Guardian so they can assist you in the event of mental incapacity.

 

A devastating accident or illness can happen to anyone. Having an LPA in place can provide peace of mind that in the event that mental capacity is lost, your personal wishes will be carried out and fulfilled by those you trust.

We can advise and support you with creating your lasting powers of attorney. Learn more about the process by getting in touch with us, simply fill out our contact form.

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Kathleen specialises in helping individuals structure their personal affairs. She also advises charities on a range of issues.

Kathleen advises on a broad spectrum of estate planning issues, including setting up trusts, and preparing Wills. Kathleen can also assist with making and registering Lasting Powers of attorney.

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Published: 30th September 2022
Area: Powers of attorney

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