With over 850,000 people in the UK suffering from dementia, it is becoming increasingly essential for people to ensure that their affairs are in order and put in place to enable selected individuals to make decisions on another person’s behalf should they be unable to make them for themselves.
A Lasting Power of Attorney (LPA) gives another person, referred to as an “Attorney”, the authority to act on your behalf (the “Donor”) if and when you are unable to do so for yourself. They were introduced by the Mental Capacity Act 2005, which came into force fully on 1 October 2007, and replaced Enduring Powers of Attorney (EPAs). In order to use an LPA, it must be registered with the Office of the Public Guardian (OPG).
An LPA enables a person appointed as an Attorney to continue acting for you when mental capacity becomes an issue and/or has been lost. The reason why it is beneficial to register an LPA prior to losing mental capacity, rather than someone making an application on your behalf when capacity has been lost (known as a Deputyship), is that such applications are very expensive and time consuming, something which can cause more distress if time is of the essence. Sometimes this is the only possible option, however it is advisable to put measures in place so that you can feel confident that someone you trust is able to deal with your finances should you not be able to.
There are two types of LPAs, one in relation to your Property & Financial Affairs and secondly in relation to your Health & Welfare Decisions, and in this particular article we are going to focus on the LPA which enables your Attorney to deal with your financial affairs.
This LPA allows your Attorneys to deal with anything of a financial aspect on your behalf such as paying your bills, dealing with investments, selling your property, claiming and receiving any benefits and/or pensions, dealing with the Donor’s tax returns, and even have conduct and access to your bank accounts and financial information.
This type of LPA will authorise your Attorneys to act on your behalf, whilst you still have capacity, unless you specify otherwise. However, by allowing your attorney to act prior to you losing mental capacity does not mean that they automatically take over all of your financial decisions for you, but it does mean that they can act provided you give them consent to do so. This is particularly helpful if mobility is an issue, you are on holiday or unwell and able to leave your home.
You should only appoint people that you can truly trust to act as your Attorney(s) and usually people will consider individuals who are family members, friends or even a Professional Adviser such as a Solicitor or an Accountant. Generally, Professional Advisors are only appropriate in relation to Property and Financial Affairs.
It is also advisable to appoint individuals who will be geographically close by so that it makes the practically of acting as an Attorney more straightforward and uncomplicated. Other considerations will be in relation to an individual’s skill, time and expertise. If you are appointing a Professional, it is likely that you will need to pay for their services for them to act on your behalf, nevertheless you can also make the decision to pay all of your attorneys for their time and services when acting.
Those who are appointed as Attorneys in relation to financial affairs must be aged 18 and over at the time of appointment and must have the mental capacity to act. Furthermore, the individual must not be bankrupt or subject to any kind of debt relief orders at the time of appointment. If an individual was to become bankrupt or subject to a debt relief order in the future, their appointment will be terminated and therefore the LPA may be revoked under Section 13(5) of the Mental Capacity Act 2005.
Further considerations also need to be made about how the Attorneys are going to act. There are three possibilities as to how Attorneys can act. They can act “Jointly” meaning that they all have to act together, however this may be inconvenient for day-to-day decisions. A more practical option is to appoint them to act “Jointly and Severally”, which means that your Attorneys can act together or independently. Not only is this option more practical for day-to-day decisions, it also means that should one of your Attorneys be incapable of acting, like the remaining Attorney(s) can continue to do so. The last option is for the Attorneys to act “Jointly for some decisions and Jointly & severally when making other decisions” and provides a compromise between flexibility in relation to day-to-day decisions, yet still ensuring major and the more important decisions are made jointly.
The LPAs provide the Donor with the ability to list preferences and instructions to assist their Attorney(s) with their duties and decision making. This includes restrictions on gifts they make or how monies are invested, as well as dealing with a Donor’s business interests. It can also instruct that their Will is not to be disclosed to their Attorney(s), or a set of circumstances where they would permit this to happen. However, in absence of such instruction, the Attorney(s) can obtain a copy of the Donor’s Will, unless there is cause for concern from the disclosing Solicitor.
Our Private Client Solicitors Department can provide a complete service in relation to the creation of an LPA in respect of your Property & Financial Affairs and Health & Welfare Decisions. Not only are the team experienced to explain what such an LPA will enable your Attorney(s) will do and how they will act, but they are also happy to provide a complete service including acting as your Certificate Provider, which confirms you (the Donor) understand the purpose of the LPA, you have not been unduly influenced and there is nothing preventing the creation of the LPA, as well as drafting the necessary documentation, explaining the LPA to your Attorney(s) and registration with the OPG.
For more information on making a Property & Financial Affairs LPA, please do not hesitate to contact a member of the Private Client team who will be more than happy to assist you.
If you require more information relating to legal matters, please contact Alannah Macdonald in the Private Client Solicitor Team at The Sethi Partnership Solicitors.
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