We recommend that you read this information carefully to understand the purpose and legal consequences of making a Lasting Power of Attorney. Your attorneys and certificate provider are also advised to read it.
The information set out below is intended as guidance only and does not constitute legal advice. If you require legal advice please contact a member of the Private Client Team at Clarion.
Types of Lasting Power of Attorney
A Lasting Power of Attorney (‘LPA’) is a legal document that allows you to give another person or persons (known as ‘attorneys’) authority to make decisions on your behalf.
There are two types of LPA:
1. Lasting Power of Attorney: Financial Decisions; this allows attorneys to make decisions on your behalf about your property and financial affairs, for example paying bills, selling your property, and administering your bank account; and
2. Lasting Power of Attorney: Health and Care Decisions; this allows for decisions to be made in your behalf in relation to medical treatment, care, medication, where you live, and even life sustaining treatment.
Once completed and registered, an LPA provides the best way to ensure that somebody you trust is authorised to make decisions for you and carry out your wishes in respect of your legal, financial and personal affairs should you no longer wish to or no longer be able to make such decisions yourself.
Scope of an LPA
An LPA allows you to authorise one or more people (the ‘attorney(s)’) to make decisions on your behalf. This can be about spending your money and managing your property and affairs or decisions about your health and care, as set out above.
Your attorneys can only use either type of LPA once it is registered with the Public Guardian, see below.
This is different from the previous Enduring Power of Attorney, that can be used at the direction of the Donor (the person who has made the document) whilst they have full mental capacity. An Enduring Power of Attorney only needs to be registered with the Public Guardian when the Donor is losing or has lost mental capacity. An Enduring Power of Attorney only gives the Attorney(s) authority over the Donor’s financial affairs.
Under a Financial LPA, once it is registered with the Public Guardian, you may authorise your Attorneys to act for you if you require their assistance. Alternatively, your Attorneys can administer your affairs on your behalf if you have lost mental capacity.
Under a Health and Care LPA, once it is registered with the Public Guardian, your Attorneys may only make decisions for you once you have lost mental capacity and can no longer make health and care decisions yourself.
The Public Guardian is a civil servant, responsible for maintaining a register of all the LPAs made in England and Wales. Applications to register an LPA, or to raise questions or concerns about an LPA including the conduct of attorneys, are made to the Office of the Public Guardian in the first instance.
What happens if you do not make an LPA?
If you lose mental capacity and you do not have a valid LPA in place (or Enduring Power of Attorney) then it may be necessary for an application to be made to the Court of Protection for the appointment of a Deputy for you. A Deputy is a Court appointed person who would is given authority by the Court to make certain financial decisions for you. Other decisions may have to be made by the Court.
It is possible for a Health and Care Deputy to be appointed by the Court but this happens in far fewer cases than the appointment of a financial Deputy.
The process of a Deputy being appointed can be time consuming and costly. We therefore recommend to all of our clients that they consider putting in place LPAs to avoid this.
Choosing your attorneys
You can have one or more attorneys. An attorney should be somebody you know and trust who is at least 18 years old and has full mental capacity, or a trust corporation. An attorney must not be an undischarged or interim bankrupt.
If you choose more than one attorney you must decide whether your attorneys should act together (sometimes known as jointly) or together and independently (sometimes known as jointly and severally). The second option can provide more flexibility as it means that attorneys have the option of acting together but can also act alone.
It should be noted that if attorneys are appointed on a joint basis and one attorney dies or loses mental capacity themselves, then the whole LPA can fail. Please take our advice on the options should you have any questions about how to appoint your attorney.
If you appoint more than one attorney and do not state whether they are appointed together or together and independently, when your LPA is registered they will be treated on the basis that they are appointed jointly.
Choosing a replacement attorney
Both types of LPA also allow the ability to name one or more replacement attorneys in case an attorney is unable or unwilling to continue acting for you. Your attorneys can change their mind and may not want to act for you. If this is the case, they must tell you and the OPG.
It is not compulsory to have a replacement attorney but it is advisable if you are only appointing one attorney in the first instance.
Decisions your attorney can make for you
An attorney for financial affairs may make any decision that you could make about your property and affairs e.g. buy or sell property, manage investments or carry on a business and may access personal information. This is subject to any restrictions you place in the LPA and any decisions which are not permitted by the Mental Capacity Act 2005.
Importantly some “out of the ordinary” decisions will require the approval of the Court of Protection before the attorney can carry them out. For example an attorney must make an application to Court if they wish to:
- make gifts from the donor’s funds which exceed the limited scope permitted in the Mental Capacity Act 2005;
- make loans to members of the donors family;
- make investments in the donors own business;
- make a sale or purchase of the attorneys property at an undervalue; or
- any other transaction where there is a potential conflict between the interest of the donor and the interests of the attorney.
The above list is not exhaustive and the attorneys should seek independent legal advice when they are considering making any decision which could potentially be seen as causing a conflict of interest.
Please ask for a copy of our separate guidance notes specifically about your attorneys duties.
Restricting the powers of your attorneys or adding guidance
You can put legally binding restrictions on your attorney’s powers and the scope of their authority in both types of LPA.
Guidance is not binding on your attorneys. However, if a restriction causes any ambiguity your Attorneys may need to go to the Court of Protection and ask them to determine the terms of your LPA. This would incur a Court fee and the cost of any associated legal advice. It is therefore important to be clear about any restrictions or limitations placed on an LPA.
Paying your attorneys
An attorney is entitled to be reimbursed for out-of-pocket expenses incurred in carrying out their duties. Attorneys are not usually entitled to be paid for their time.
Professional attorneys, such as solicitors, are authorised to charge for their services. You should discuss and record any decision you make about paying your attorneys in the LPA.
Who signs the LPA?
The LPA is signed by the donor (the person making the LPA) and the attorneys. Both types of LPA must also be signed by an independent certificate provider, see below.
Notifying people before registration
At the time the LPA is registered you have the option to state that notice must be provided to at least one third party to enable them to object if they had any concerns. This person is referred to as
your “named person” in the LPA document. You can name up to five people to be notified when an application to register your LPA is made.
An independent person must complete and sign a certificate in both forms of LPA to confirm that, in their opinion, you are making the LPA of your own free will, that you understand its purpose and the powers you are giving your attorneys. This is an important safeguard and your LPA cannot be registered unless the certificate is completed.
Typically a lawyer or GP can act as the certificate provider and there may be a charge for this service from any professional. Alternatively someone who has known you for over 2 years can act as certificate provider in certain circumstances.
Registration of the LP
Your LPA can be registered by you or your attorneys.
Some clients will prefer to register the LPA straight away so that it is available to be used by the attorneys as soon as it is needed. Other clients will prefer to leave their LPAs unregistered and only register them if and when they are needed in the future.
The disadvantage of the latter option is that the registration process can take a number of months with the OPG and therefore if there was an emergency your LPA would not be able to be used until it is registered. There is a procedure for emergency applications to register an LPA but the Public Guardian must agree that the circumstances constitute an emergency.
The advantage of leaving your LPA unregistered is that it is easier to amend it, for example if your children reach adulthood and you wish to appoint them as Attorneys. Only registering the LPA when it is needed also means that the registration fee payable to the Public Guardian on registration is only paid once.
Cancelling your LPA
You can cancel your LPA even after it is registered if you have the mental capacity to do so. You need to take formal steps to revoke the LPA. You must tell your attorney if you do and, if it is registered, you will need to ask the OPG to remove it from the register of LPAs.
Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.